IBP's Pork Earnings Up; Beef Disappoints

IBP's pork operating earnings were up dramatically during the first half of the year, compared to the same period in 1997.

"We've experienced a major turnaround in the profitability of our fresh pork business, compared to a year ago," said Robert Peterson, IBP chairman and CEO.

To further enhance pork profitability, IBP is expanding a long-running customer relationship it has with Thorn Apple Valley, Inc., the Michigan-based processed meats manufacturer. As part of a long-term supply agreement, IBP will be providing a larger volume of pork cuts and trimmings to TAV for further processing. TAV announced in June its decision to exit the pork slaughter business and to direct its resources to growing its branded processed meats line.

"While the performance of our beef operations is below our expectations, we believe it easily exceeds the results of our major competitors," Peterson said. Continued large supplies of beef, as well as competing proteins, have pressured product prices and profit margins. Due to higher average live weights, some analysts predict the beef industry may produce more beef this year than in 1997, creating the largest beef supply in history. Another mitigating factor has been the weak economic climate in the Far East.

To help bolster beef sales, IBP continues to pursue its strategy of developing more value-added, higher-margin products. A recent example is the company's development and marketing of retail-ready, fresh ground beef, which leaves IBP manufacturing plants ready for placement in the retail case. The new product line, which is being sold nationwide, uses a new packaging system designed to extend the life of the product. Initial customer acceptance has been very favorable.

IBP is the world's leading producer of high quality fresh beef, pork and related allied products and supplies premium fully prepared meats and other consumer-ready foods for the retail and foodservice industries.