Meat + Poultry - May 2006 - 52

Business Notes
Swift & Co. to sell its
non-fed cattle business

U.S. Premium acquires
Brawley Beef

XL Foods, a division of Nilsson Bros.
Group, a Canadian cattle feeding and
marketing company, has signed an
agreement to acquire
Swift & Co.'s nonfed cattle business.
This business includes a plant in
Omaha and assets
in Nampa, Idaho.
Swift & Co., Greeley,
Colo., intends to reinvest the sale proceeds back into its existing core lines
of business. Additional transaction
terms were not disclosed.
"We are pleased to announce this
agreement with XL Foods, a respected
operator in our industry, in a transaction that affords both companies the
opportunity to enhance their strategic
focus in their respective sectors of the
core beef business - fed-cattle for
Swift, non-fed cattle for XL," said
Sam Rovit, president and C.E.O. of
Swift & Co.

Kansas City, Mo.-based U.S. Premium Beef, L.L.C. has entered into a
non-binding letter of intent to acquire
Brawley Beef, L.L.C. National Beef
Packing Co., of which U.S.P.B. is the
majority owner, will own and operate
the Brawley Beef business. The parties expect to enter into a definitive
agreement following due diligence.
Brawley Beef, an alliance of cattle
producers in Arizona and California,
supplies its meatpacking companies
with more than 400,000 animals per
year. The company was formed by
producers in 2001 and operates in
Brawley, Calif.
This past August, the company
reported year-end earnings of $20.8
million, compared with earnings of
$44 million in 2004. At that time,
company officials told analysts
that the continued high cost for live
cattle and lack of imports squeezed
profit margins.

Wellness influencing food purchasing decisions
Health and nutrition concerns are influencing household food purchases in
the United States, according to a new report from the Food Marketing Institute and Prevention magazine, "Shopping for Health 2005: Meeting the
Needs of Family Health and Wellness." The annual study also shows shoppers are buying more organic products for health reasons and that they most
often purchase these goods from supermarkets.
"Shoppers are moving toward healthier diets and looking for guidance in
making decisions about food purchases," said Michael Sansolo, senior vice
president of the F.M.I. "This study provides supermarket operators with a
blueprint for strengthening customer loyalty by addressing consumer health
and wellness needs."
More than 60 percent of shoppers surveyed believe their diets could be
healthier (70 percent for shoppers with children). The reasons cited for seeking a healthier diet include: to lose weight (42 percent), prevent health problems later in life (39 percent), follow a doctor's advice (30 percent) and manage an existing medical condition (28 percent). The reasons shoppers give
for not eating more healthfully include time constraints (30 percent), the high
cost of healthy foods (27 percent), lack of concern (23 percent) and conflicting information about what is healthy (21 percent).
60

MEAT&POULTRY

May 2006

www.MEATPOULTRY.com

Meats businesses
help bolster Kraft's
first quarter
A favorable tax
benefit related to resolution of the
Altria Group
tax audit, coupled with higher prices and cost savings from an ongoing two-year restructuring, spurred
earnings higher at Kraft Foods Inc.
in the first quarter of 2006.
Net income in the first quarter
ended March 31 was $1 billion,
equal to 61c per share on the common stock, up 41 percent from $713
million, or 42c per share, in the
same period a year ago. Kraft maintained its full-year 2006 guidance at
$1.55 to $1.60 per share.
The company's sales in the first
quarter increased only slightly, edging up to $8.12 billion from $8.06
billion. Volume declined 1 percent,
as the company continues to implement pruning and pricing actions
with the goal of reaching a 10 percent reduction in stock-keeping
units by the end of the year.
"Our year is off to a good start,"
said Roger Deromedi, C.E.O. "Our
brand value propositions strengthened with successful new products,
quality enhancements and marketing initiatives. We continued to
drive out costs and simplify our
business. While input costs and the
E.U. remain challenging, I'm confident that our momentum will continue to build as 2006 progresses."
Kraft cited several factors affecting the comparability of year-overyear results. First, the company
incurred $215 million in asset impairment, exit and implementation
costs in the first quarter of 2006,
which compared with costs of $169
million in the same year ago period.
Second, the company recorded a

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Meat + Poultry - May 2006

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