UPDATE 2-Smithfield Foods profit falls on weak pork exports
* First-quarter earnings $0.27/share
* Revenue rises 10 pct to $3.39 bln
Sept 6 (Reuters) - Smithfield Foods Inc, the U.S. pork producer that has agreed to a $4.7 billion buyout by China's Shuanghui International Holdings, said on Friday that quarterly profit fell by more than one-third, hurt by fewer exports to China, Russia and Japan.
Analysts attributed much of the drop to a $36.5 million operating loss for Smithfield's fresh-pork business.
The company, whose products include Smithfield bacon and Eckrich sausages, said it was unable to offset higher hog costs with price hikes or more international sales.
Earlier this year China and Russia, major buyers of fresh pork, began blocking imports of meat raised with ractopamine, a feed additive that packs lean muscle on animals, because of food-safety concerns.
Smithfield has been winding down its use of ractopamine and has resumed pork shipments to China.
The loss in Smithfield's fresh-pork business was "not expected and disappointing," D.A. Davidson & Co analyst Tim Ramey told Reuters.
Chief Executive Larry Pope said the fiscal first quarter should be the low point this year for Smithfield, which has been putting greater emphasis on more-profitable packaged meats.
The company's net income fell to $39.5 million, or 27 cents per share, in the first quarter that ended July 28, from $61.7 million, or 40 cents per share, a year earlier.
Sales rose 10 percent to $3.39 billion.
Operating margin in fresh pork was negative 2.7 percent, the lowest since at least the first quarter of 2009, when Smithfield started disclosing such results, JP Morgan analyst Ken Goldman said in a client note.
The fresh-pork results suggest that smaller rival Tyson Foods Inc could see similar weakness in that category. It also sells some pork from hogs fed ractopamine; its business, however, is dominated by chicken and beef.
Smithfield did not provide an update on its deal with Shuanghui, but many analysts expect it to close, despite concerns about foreign land-ownership restrictions, national security and food safety.
A person familiar with the matter told Reuters on Thursday that the U.S. government should soon approve the acquisition, which including debt is valued at $7.1 billion. The deal would be the largest-ever Chinese acquisition of a U.S. company.
Activist hedge fund Starboard Value LP, a New York-based fund that holds a 5.7 percent stake in Smithfield, on Sept. 3 said it was working with investors interested in paying "substantially" more for Smithfield than the price Shuanghui had agreed to. It also said it planned to vote against the merger at a shareholder meeting later this month.
Smithfield's shares slipped 0.1 percent to $33.94 in midday trading on the New York Stock Exchange.