Milling & Baking News Corporate Profiles - October 2011 - (Page 116)

Company Overview Smithﬁeld Foods, Inc. Efforts to improve packaged meats business lead to improved earnings o understand Smithfield Foods’ market position in 2011, one must look back five years to when the company’s processed meats portfolio featured more than 100 brands. Today, that portfolio features 12 key brands that highlight Smithfield’s transition from a commodity-oriented slaughterer and processor of pork to a focused manufacturer and marketer of value-added food service and retail products. For the Smithfield, Va.-based company’s most recent quarter ended July 31, net income was $82.1 million, equal to 50c per share on the common stock, which compared with income of $76.3 million, or 46c per share, during the same quarter of the previous year. Sales for the quarter were $3,094.2 million, up 7% from $2,901.3 million during the same quarter of the previous year. “Our record performance of our business for the past five quarters is the direct result of the successful execution of our strategy to position Smithfield as a leading packaged meats company by increasing customerfocused marketing of our core brand portfolio, improving our overall cost structure and fortifying our balance sheet, plus the benefit of favorable industry conditions,” said C. Larry Pope, president and chief executive officer. “We are supporting our packaged meats T business by boosting our sales and marketing budget to activate our brands and fuel innovation to bring us closer to our consumers. This is promoting growth and strengthening our position in many important product categories, including bacon, dinner sausage, hotdogs and portable lunches.” In an effort to promote the health profile of its products, Smithfield announced in February that it had reduced the amount of sodium in its marinated pork products by 25.5%. Across its entire processed meats portfolio the company has reduced sodium content by 8.2%. The strength of Smithfield’s packaged meats business prompted the company to increase its expected capital expenditures in 2012 from $245 million to $300 million. The additional funds will go toward adding capacity to packaged meats operations. But the year was not without its challenges. In early April, Smithfield announced it was in talks with Pedro Balive, the chairman of Campofrio, one of the largest meat processors in Europe, to acquire the rest of Campofrio Food Group S.A. for €9.5 ($13.60) per share. Smithfield owns approximately 34% of Campofrio. But in June the company announced it had terminated the effort. C. Larry Pope Mr. Pope said Smithfield’s decision to back away had been influenced by several factors, including continued adverse economic conditions in Europe that showed few signs of abating, and a decline in Smithfield’s stock price. In April, Cargill acquired Smithfield’s hog production site near Dalhart, Texas, for approximately $33 million. “The sale of this hog production facility is a further extension of our strategy to reduce exposure to commodity businesses and shed non-core assets,” Mr. Pope said at the time. Smithfield also completed the sale of its Texhoma, Okla., hog production facility to Prestage Farms in January. Terms of the sale were not disclosed. CP F ast acts A focus on the valueadded packaged meats business led to improved earnings and revenue. Smithﬁeld withdrew its bid to acquire all outstanding shares of the Campofrio Food Group S.A. due to economic conditions in the European market. Smithﬁeld sold hog production facilities near Dalhart, Texas, and Texhoma, Okla. 116 \ October 2011 Milling & Baking News • Food Business News • Baking & Snack • Meat & Poultry Corporate Proﬁles

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Milling & Baking News Corporate Profiles - October 2011