MERRIAM, KAN. – Seaboard Corp. announced its financial results for the second fiscal quarter that ended July 1, 2023, which included an operating income loss of $104 million in its Pork segment. This is down from a $1 million profit in the same period during 2022. Operating income for the first six months of 2023 for the segment was a $316 million loss compared to a $28 million profit last year.

According to the company’s filing with the Securities and Exchange Commission (SEC), the company reported total net sales of $2.39 billion compared to $2.97 billion during the same period last year.

The Pork segment reported net sales of $595 million in the second quarter, about a 10% decrease over the same quarter in 2020, which totaled $663 million. 

Meanwhile, Butterball LLC, which Seaboard has a 52.5% noncontrolling interest, reported net income of $41 million for the first half of fiscal 2023, compared to $27 million the previous year. During the first six months of the year, the company reported sales of $16 million in Q2, a 45.5% increase compared to $11 million during the same period in 2022. 

In its SEC filing, Seaboard said that its management is unable to predict market prices for turkey products and the cost of feed for future periods, but it anticipates the segment to be profitable for the rest of 2023.  

Throughout the first six months of the fiscal year, Seaboard said it invested $219 million in property, plant and equipment, of which $151 million was invested in the Pork segment for biogas recovery projects, normal replacement of breeding herd and other investments.

Seaboard also commented on the ongoing legal battle over the housing of sows with Prop 12 and Massachusetts Question 3 and how that will affect the company.

“Diversity of standards for housing sows requires each producer to implement separate record keeping to track compliant animals through the growing process to the processing plant, and finished products from the processing plant to third party purchasers,” the company said. “The enactment of more stringent standards can impair the value of existing assets, increase the cost of production and distribution, lower the value of non-compliant products and/or disrupt the market for pork which could result in a reduction in the sales prices of pork products.”

Seaboard noted that the volume of pork that would fall under the new laws in California and Massachusetts accounted for approximately 5% of direct sales for the year ended Dec. 31, 2022.

The company also mentioned that it settled on pork compensation antitrust litigation stemming from a Nov. 2022 class action complaint that involved three employees of pork or beef processing plants in the United States. The lawsuit involved several pork and beef processors, including Seaboard.  

Even with some recent settlements, Seaboard has decided that it would not settle any more collusion lawsuits going forward.

“Seaboard believes that it has meritorious defenses to the claims alleged in these matters and intends to vigorously defend any matters not resolved by the above settlement,” the company said in its SEC filing. “It is impossible at this stage either to determine the probability of a favorable or unfavorable outcome resulting from these suits, or to reasonably estimate the amount of potential loss or range of potential loss, if any, resulting from the suits. However, the outcome of litigation is inherently unpredictable and subject to significant uncertainties, and if unfavorable, could result in a material liability. 

Back in June, the company reached a settlement with a class of direct purchasers, agreeing to pay $9.75 million to resolve allegations of a pork price-fixing conspiracy.