Smithfield income eases slightly in fiscal '07

by FoodBusinessNews.net Staff
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SMITHFIELD, VA. — For the fiscal year ended April 29, Smithfield Foods, Inc. posted net income of $166,800,000, equal to $1.49 per share on the common stock, down 3% compared with $172,700,000, or $1.55 per share, during the same quarter of the previous year.

Sales for the year were $11,911,100,000, a 4% increase compared with $11,403,600,000 during 2006.

"The acquisitions that we made this past year have been immediately accretive to earnings," said Larry Pope, president and chief executive officer. "We are reshaping the company through integrating these acquisitions, both branded packaged meats businesses, and executing a strategy to realign and rationalize our manufacturing capacities. We have maintained our focus on utilizing our raw materials internally and eliminating low margin business, and fourth quarter reflects the impact of these changes."

For the fiscal year, operating profit for the pork segment was $228 million, a 49% increase compared with $153 million during the previous year. Sales in the segment were $7,933,900,000, up 9% compared with $7,300,600,000 last year.

The beef segment had an operating profit of $5.7 million during the year compared with a $2.8 million loss during 2006. Sales in the beef segment were $2,574,700,000, down 1% compared with $2,599,000,000 last year.

Operating profit for the international segment came in at $38.3 million, which compared with a loss of $15.7 million last year. Sales were $954,600,000 during the year, a 15% decrease compared with $1,127,400,000 during 2006.

Operating profit in the hog production segment was $211,400,000, a 36% decrease compared with $330,000,000 last year. Sales in this segment were $1,787,000,000, down 1% compared with $1,801,300,000 in 2006.

Operating profit in the "other" segment was $40.9 million, up 8% compared with $37.8 million last year. Sales in the other segment were $132,300,000, an 11% decrease compared with $149,200,000 in 2006.

For the fourth quarter ended April 29, net income was $37 million, or 33c per share, up sharply from $1.1 million, or 1c per share, during the same quarter of the previous year. Sales during the quarter were $3,061,200,000, a 14% increase compared with $2,675,400,000 during the same quarter of 2006.

"Grain prices, as well as increases in freight and energy costs, are impacting our operations," Mr. Pope said. "However, we are raising prices in an effort to offset these costs and we are focusing on driving out inefficiencies. The opening of the Korean market to United States beef exports and the continued opening of the Japan market is good news for our beef processing business."

Mr. Pope also said cattle feeding should have a better year looking forward, and the company is seeing improvement in hog production operations as a result of the circovirus vaccine. He said he expects improvement in the packaged meats margins and that 2008 should be stronger than 2007.

Smithfield also named a new vice-president and chief financial officer, Carey J. Dubois, effective July 1. Mr. Dubois has been the treasurer of Smithfield since 2005 and previously held financial positions at Bunge Ltd., Pepsi Bottling Group, Joseph E. Seagram and Sons, and Louis Dreyfus Corp. He will take over for Robert W. Manly IV, executive vice-president, who has been the interim chief financial officer.

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