Seaboard Corp (SEB, Financial) filed Quarterly Report for the period ended 2012-06-30.
Seaboard Corporation has a market cap of $2.81 billion; its shares were traded at around $2321.02 with a P/E ratio of 9.1 and P/S ratio of 0.5. Seaboard Corporation had an annual average earning growth of 10% over the past 10 years. GuruFocus rated Seaboard Corporation the business predictability rank of 2.5-star.
Operating income decreased by $76.2 million and $113.2 million for the three and six month periods of 2012, respectively, compared to the same periods in 2011. The decreases primarily reflect a one-time gain on sale of power generating facilities of $51.4 million recognized in the second quarter of 2011. The decreases also reflect lower domestic sales prices for pork products sold and, to a lesser extent, higher feed costs for the Pork division.
Operating income for this segment decreased $3.7 million and $1.1 million for the three and six month periods of 2012, respectively, compared to the same periods in 2011. The decreases for the three and six month periods primarily reflect the $6.4 million and $12.2 million fluctuation of marking to market the derivative contracts, as discussed below, partially offset by higher margins on commodity sales, especially related to corn sold to third parties. Excluding the effects of these derivative contracts, operating income increased $2.7 million and $11.1 million for the three and six month periods, respectively.
Had Seaboard not applied mark-to-market accounting to its derivative instruments, operating income for this segment would have been higher by $8.6 million and $2.4 million, respectively, for the three and six month periods of 2012 and operating income would have been higher by $2.2 million and lower by $9.8 million, respectively, for the three and six month periods of 2011. While management believes its commodity futures and options and foreign exchange contracts are primarily economic hedges of its firm purchase and sales contracts or anticipated sales contracts, Seaboard does not perform the extensive record-keeping required to account for these types of transactions as hedges for accounting purposes. Accordingly, while the changes in value of the derivative instruments were marked to market, the changes in value of the firm purchase or sales contracts were not. As products are delivered to customers, these existing mark-to-market adjustments should be primarily offset by realized margins or losses as revenue is recognized over time and thus, these mark-to-market adjustments could reverse in fiscal 2012. Management believes eliminating these adjustments, as noted in the table above, provides a more reasonable presentation to compare and evaluate period-to-period financial results for this segment.
Selling, general and administrative (SG&A) expenses increased by $6.4 million and $12.8 million for the three and six month periods of 2012 compared to the same periods in 2011. The increases are primarily the result of increased personnel costs in most segments and the consolidation of PSI discussed above. As a percentage of revenues, SG&A increased to 4.0% and 4.1% for the three and six month periods of 2012, respectively, compared to 3.8% for each of the same periods in 2011.
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Seaboard Corporation has a market cap of $2.81 billion; its shares were traded at around $2321.02 with a P/E ratio of 9.1 and P/S ratio of 0.5. Seaboard Corporation had an annual average earning growth of 10% over the past 10 years. GuruFocus rated Seaboard Corporation the business predictability rank of 2.5-star.
Highlight of Business Operations:
Cash and short-term investments as of June 30, 2012 increased $93.4 million to $488.2 million from December 31, 2011. The increase was primarily the result of $143.3 million in net cash from operating activities and $40.9 million in increased net borrowings. Partially offsetting this increase was cash used for capital expenditures of $68.1 million and repurchase of common stock of $15.9 million. Cash from operating activities increased $139.8 million for the six months ended June 30, 2012 compared to the same period in 2011, primarily as a result of lower working capital needs in the Commodity Trading and Milling segment for receivables and inventories and also timing of payments for current liabilities. Partially offsetting this increase was lower net earnings for the six months ended June 30, 2012 compared to the same period in 2011.Operating income decreased by $76.2 million and $113.2 million for the three and six month periods of 2012, respectively, compared to the same periods in 2011. The decreases primarily reflect a one-time gain on sale of power generating facilities of $51.4 million recognized in the second quarter of 2011. The decreases also reflect lower domestic sales prices for pork products sold and, to a lesser extent, higher feed costs for the Pork division.
Operating income for this segment decreased $3.7 million and $1.1 million for the three and six month periods of 2012, respectively, compared to the same periods in 2011. The decreases for the three and six month periods primarily reflect the $6.4 million and $12.2 million fluctuation of marking to market the derivative contracts, as discussed below, partially offset by higher margins on commodity sales, especially related to corn sold to third parties. Excluding the effects of these derivative contracts, operating income increased $2.7 million and $11.1 million for the three and six month periods, respectively.
Had Seaboard not applied mark-to-market accounting to its derivative instruments, operating income for this segment would have been higher by $8.6 million and $2.4 million, respectively, for the three and six month periods of 2012 and operating income would have been higher by $2.2 million and lower by $9.8 million, respectively, for the three and six month periods of 2011. While management believes its commodity futures and options and foreign exchange contracts are primarily economic hedges of its firm purchase and sales contracts or anticipated sales contracts, Seaboard does not perform the extensive record-keeping required to account for these types of transactions as hedges for accounting purposes. Accordingly, while the changes in value of the derivative instruments were marked to market, the changes in value of the firm purchase or sales contracts were not. As products are delivered to customers, these existing mark-to-market adjustments should be primarily offset by realized margins or losses as revenue is recognized over time and thus, these mark-to-market adjustments could reverse in fiscal 2012. Management believes eliminating these adjustments, as noted in the table above, provides a more reasonable presentation to compare and evaluate period-to-period financial results for this segment.
Selling, general and administrative (SG&A) expenses increased by $6.4 million and $12.8 million for the three and six month periods of 2012 compared to the same periods in 2011. The increases are primarily the result of increased personnel costs in most segments and the consolidation of PSI discussed above. As a percentage of revenues, SG&A increased to 4.0% and 4.1% for the three and six month periods of 2012, respectively, compared to 3.8% for each of the same periods in 2011.
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