Meat&Poultry - September 2013 - 10

Business Notes

Exports drag on Smithfield Q1 earnings
Declining exports in key markets com-

international segment.”

according to the company. Volume in

bined with higher costs for hog-raising

Sales for the quarter advanced 10

the segment grew 2 percent. Operat-

caused a 36 percent drop in Smith-

percent to $3.4 billion. Smithfield,

ing margins in Hog Production were

field Foods Inc.’s first-quarter earn-

Kretschmar, Margherita and Caran-

at 8 percent, or $17 per head. Smith-

ings for fiscal 2014.

do brands saw growth in the quarter,

field sold 6 percent more hogs.

For the quarter ended July 28,

the company said, while the Armour

The company plans to focus on

Smithfield reported a profit of $39.5

and Curly’s brands posted double-

increased consumer marketing, prod-

million, or 27 cents per diluted share,

digit growth. The company gained

uct innovation and capital investment.

compared with a profit of $61.7 mil-

market share across the cooked din-

Pope said the company will use its in-

lion, or 40 cents per diluted share a

ner sausage, dry sausage and mari-

tegrated platform to move its product

year ago. The company said its inter-

nated pork categories. Distribution

mix toward differentiated, branded

national operating margins declined to

expanded for Eckrich cooked dinner

and value-added products, both do-

1 percent on higher feed costs.

sausage, Gwaltney hot dogs, Smith-

mestically and in exports.

“The operating environment in

field bacon, Curly’s BBQ, Armour

At the time of the company’s quar-

fresh pork and our international busi-

dry sausage, Armour portable lunches

terly results, Smithfield was awaiting a

ness was difficult in the first quarter,”

and Smithfield and Farmland brand

ruling on its buyout by China’s Shuan-

said C. Larry Pope, Smithfield CEO.

marinated pork.

ghui International Holdings Ltd. from

“Normal seasonal weakness in fresh

Fresh pork operating margins

the Committee on Foreign Invest-

pork was exacerbated by declines in

shrank 3 percent to $5 per head on

ment in the US. Activist sharehold-

key export markets, namely Japan, as

higher hog costs that weren’t passed

er Starboard Value LP, a New York

well as China and Russia. Higher rais-

on through higher prices or exports.

hedge fund, planned to vote against

ing costs in our hog-production busi-

Operating margins in the Packaged

the proposed acquisition because the

nesses in Eastern Europe and Mexico

Meats business declined on higher raw

company is organizing an alternative

adversely impacted earnings in our

material costs, especially pork bellies,

bid for Smithfield.

Cargill plant to get $48M upgrade
Cargill announced plans to add an au-

to be operational by spring of 2015,

“Installation of this new system will

tomated order distribution system at

the company said. Once completed,

help us better meet our customers’ ex-

its Dodge City, Kan. beef-processing

the order distribution system will hold

pectations, something we have demon-

plant. The project is expected to cost

155,000 boxes of beef. According to

strated as a core competency through

$48 million.

the company, this will increase the

similar investments made in recent

boxed-beef capacity at the Dodge City

years at our Schuyler, Neb.; Friona,

plant by 130,000 boxes.

Texas; and High River, Alberta, Can-

“Installation of this
new system will
help us better meet
our customers’
expectations...”

“This new distribution system will

ada, beef-processing plants.”
The Dodge City plant supplies beef

order accuracy and on-time delivery,

products to retail, foodservice and pro-

in addition to providing better capabil-

cessed foods customers throughout

ity to handle the ever-increasing com-

the US and internationally. The fa-

Construction on the 62,000-sq.-

plexity of product offerings shipped

cility spans 1,400 acres and processes

ft. beef-processing facility will begin

to domestic and international mar-

6,000 head of cattle per day. Nearly

during the fourth quarter of 2013, and

kets,” said John Keating, president

2,700 employees work at the Dodge

the distribution system is scheduled

10

benefit our customers by improving

of Wichita, Kan.-based Cargill Beef.

City plant.

• Meat&Poultry • September 2013 • www.MeatPoultry.com
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Meat&Poultry - September 2013

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