Meat + Poultry - April 2009 - 12

BUSINESS NOTES
Smithﬁeld posts third-quarter loss on increased sales
Smithﬁeld Foods Inc. suffered a third
quarter net loss of $103.1 million ($.72
per diluted share), including non-recurring items and charges. Sales, however,
were $3.3 billion vs. $3.1 billion a year
ago. The current quarter included 14
weeks compared
to 13 weeks in
last year's third
quarter.
"Our results
indicate that, despite the difficult environment
and losses we
Pope
have sustained
in swine production, many parts of
Smithﬁeld are performing extremely
well," said Larry Pope, president and
CEO. "Our focus on improving packaged meats results is paying off. We

earned record margins in this business
in the quarter. Once our restructuring
plan takes hold, these margins are expected to widen even further."
Smithﬁ eld had $960 million in
available liquidity at the end of the
third quarter. The company reduced

overall indebtedness by more than
$700 million since the fourth quarter
of ﬁ scal 2008, including more than
$300 million in the third quarter.
Debt to total capitalization has been
reduced to 53 percent.
Record packaged-meats results
were offset in the pork segment by
$84.8 million ($.38 per diluted share)
of restructuring charges and weaker

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April 2009

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fresh-pork margins. Fresh-pork volume was ﬂat on a comparable basis to
last year. Total packaged-meats margins expanded substantially despite a
modest volume decrease of 4 percent
compared to a year ago due to price
discipline and continued emphasis on
operating efﬁciencies.
Export demand in several markets
was signiﬁcantly stronger than a year
ago. Third-quarter exports last year
included sales of 70 million lbs of
pork carcasses to China, representing 22 percent of total exports. Even
though there were no similar sales
this quarter, export sales were down
only 2 percent from the record levels of last year. Excluding the incremental carcass sales last year, export
sales rose 26 percent.
Hog-production losses continued
due to extremely high feed costs.
Domestic-raising costs increased to
$62 per cwt versus $49 per cwt in the
prior year. Live hog-market prices in
the U.S. were $40 per cwt compared
to $37 per cwt last year.
Murphy-Brown, Smithﬁeld's hog
production subsidiary, has liquidated
10 percent of its United States sow herd
in the last year. This has resulted in
100,000 fewer sows, which will result
in production of approximately two
million fewer market hogs annually,
beginning in ﬁscal 2010.
The large increase in other segment
sales was primarily due to the sell-off
of $50.9 million of the company's cattle
inventory. Lower segment results reﬂect
cattle-inventory write downs.
In February, the company announced a wide-ranging restructuring plan for its pork segment. "We
expect the pork group restructuring
plan to result in annual cost savings
of $55 million in ﬁscal 2010 and $125
million by ﬁ scal 2011," Pope said.
"This plan will create true synergies
between our independent operating
companies and produce more opportunities to improve the bottom line
in the future."

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Meat + Poultry - April 2009

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