Smithfield Foods hailed a "turning" in the pig farming cycle as it unveiled its first quarterly profit from hog production in nearly three years, and after chalking up more than $1.1bn in operating losses.

The hog and pork giant unveiled group earnings of $76.3m for the three months to August 1, the first quarter of its financial year, compared with a $107.7m loss a year before.

The improvement was driven by a return of its hog production to the black for the first time since autumn 2007, reflecting both higher hog prices and lower costs of rearing animals.

In the main US business, selling prices for hogs soared 38% year on year to $58 per hundredweight, putting them back above costs, which fell by 7% to $54 per hundredweight.

Even in the previous quarter, the business was recording a loss on rearing of $1 per hundredweight.

Recession over 

"The business environment... sharply improved in the hog production segment in the first quarter," Larry Pope, the Smithfield chief executive, said, with the division reporting a $177.6m operating profit compared with a $74.8m loss a year before.

And he forecast further profits ahead, now the "hog production cycle has turned", after a recession billed as one of the sector's worst ever, caused first by soaring grain prices from 2007, which lifted feed costs, and then by the global recession, which slashed demand for pork.

"The hog production segment should continue to be profitable, supported by lower hog supplies," Mr Pope said.

The US sector has witnessed steep cutbacks in animal numbers as producers, including Smithfield, slashed herds to reduce losses.

'Tight supplies'

Mr Pope also forecast a continued improvement in the group's pork division, with robust wholesale prices, which set a record during the last quarter, continued to more than offset the rise in hog values.

"The pork segment will continue to benefit from tight protein supplies, as slaughter levels and freezer stocks continue to be lower year over year," he said.

"The second quarter is generally a seasonally strong quarter for fresh pork and we expect to deliver solid margins in this segment going forward."

In the latest period, the pork business raised operating profits by 12.2% to $113.3m, led by a return in the fresh meat unit to the black.

Smithfield shares closed 1.3% higher at $16.52 in New York.