Aug. 23 (Bloomberg) -- Smithfield Foods Inc., the world's biggest hog and turkey producer, reported quarterly net income doubled on rising beef and pork sales. Hormel Foods Corp. said profit fell on higher costs to make Spam meats and bacon bits.

Smithfield's net income in the fiscal quarter ended July 29 rose to $54.5 million, or 41 cents a share, from $24.6 million, or 22 cents, a year earlier. Hormel earnings fell during the same period to $57.4 million, or 41 cents a share, from $59.6 million, or 43 cents.

U.S. pork exports have surged on increased demand in China, sending hog prices up 11 percent in Chicago. Smithfield boosted production of the animals by 27 percent during the quarter after acquiring Premium Standard Farms. Hormel said higher beef, pork and poultry prices cut profit on its meat products, and rising grain costs led to a 19 percent drop in Jennie-O turkey earnings.

``Hormel has not been able to pass along the higher costs,'' Stephens Inc. analyst Farha Aslam said. ``Smithfield put up very good numbers in the hog-production group and in the international segment.''

The Smithfield results were better than analysts expected, sending the shares up $2.49, or 8.3, to $32.58 at 4:01 p.m. in New York Stock Exchange composite trading, the biggest gain since Oct. 13, 2003. The shares are up 27 percent this year.

Hormel rose 39 cents, or 1.1 percent, to $34.79 in New York. The shares are down 8.4 percent in the past year.

Better Than Expected

Smithfield said a writedown on the discontinued operations of Smithfield Bioenergy LLC reduced profit by $6.7 million, or 6 cents a share. Excluding the writedown, Smithfield earned 47 cents, beating the average estimate of 44 cents in a Bloomberg survey of nine analysts.

Sales rose 21 percent in its fiscal first quarter to $3.36 billion, the Smithfield, Virginia-based company said today in a statement.

Chief Executive Officer Larry Pope said on a conference call with analysts today that the company is in ``substantial'' talks with Beijing-based China National Cereals, also known as Cofco, about more export orders for U.S. pork. China is seeking more imports after a respiratory virus hurt domestic supplies.

Smithfield's pork profit rose to $26.5 million, up 49 percent from a year earlier. Operating profit from hog production rose 5.2 percent to $93 million.

Profit in pork-processing rose after Smithfield bought the Armour-Eckrich meat brands from ConAgra Foods Inc. last October. Profit in beef almost quadrupled on higher export sales to Japan and South Korea, which reopened their markets last year for the first time after banning U.S. shipments in December 2003 because of a case of mad-cow disease.

Hormel

Hormel said sales rose 8 percent to $1.52 billion in its fiscal third quarter.

The company, based in Austin, Minnesota, said Aug. 9 that profit was less than it forecast in the quarter because of higher pork, beef and corn costs. Analysts on average expected profit of 41 cents a share, based on seven estimates in a Bloomberg survey.

Hog futures on the Chicago Mercantile Exchange averaged 74.74 cents a pound during the fiscal quarter, up from 67.29 cents a year earlier. Cattle futures averaged 92.55 cents a pound, up 15 percent.

Beef prices have exceeded Hormel's expectations, boosting the costs for making Hormel's Chili and Dinty Moore Beef Stew, Stephens Inc.'s Aslam said. ``Hormel did institute selective price increases this spring, but it has not been enough to offset the commodity hit,'' she said.

Aslam expected Hormel to earn 41 cents a share in the quarter and rates the stock ``overweight.'' She expected Smithfield to earn 47 cents and also rates the shares ``overweight.''

To contact the reporter on this story: Daniel J. Goldstein in Washington at dgoldstein1@bloomberg.net.

Last Updated: August 23, 2007 16:29 EDT