Correction: an earlier version of this story said the operating margin on fresh pork fell to 3 percent in paragraph 2, the correct figure is negative 3 percent.
(Reuters) — Smithfield Foods Inc., the U.S. pork producer that has agreed to a $4.7 billion buyout by China’s Shuanghui International Holdings, reported a 36 percent fall in quarterly profit, hurt by lower exports to key international markets such as Japan, China and Russia.
Fresh pork operating margins fell to negative three percent in the first quarter due to higher hog costs.
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“The operating environment in fresh pork and our international business was difficult in the first quarter,” chief executive C. Larry Pope said in a statement.
“Normal seasonal weakness in fresh pork was exacerbated by declines in key export markets.”
Smithfield did not provide an update on its deal with Shuanghui, but many analysts expect it to close, despite concerns about foreign land ownership restrictions, national security and food safety.
A person familiar with the matter told Reuters on Thursday that the U.S. government should soon give the go-ahead to the acquisition. The deal will be the largest ever Chinese acquisition of a U.S. company.
Smithfield whose products include Smithfield bacon and Eckrich sausages, said net income fell to $39.5 million, or 27 cents per share, in the first quarter, from $61.7 million, or 40 cents per share, a year earlier.
Sales rose 10 percent to $3.39 billion.
Smithfield’s shares were down slightly at $33.88 in premarket trading. They had closed at $33.96 on the New York Stock Exchange on Thursday.
