Smithfield income down 31% in year

by Staff
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SMITHFIELD, VA. — Lower margins in fresh pork contributed to 31% decline in income for Smithfield Foods, Inc. during fiscal 2012.

For the year ended April 29, the company had income of $361.3 million, equal to $2.23 per share on the common stock, which compared with income of $521 million, or $3.14 per share, during fiscal 2011. Sales for the year were $13,094.3 million, up 7% from $12,202.7 million.

“Fiscal 2012 net income represented the second best year in Smithfield history — following a record year in fiscal 2011 — and underscored our ability to continue to deliver solid earnings to our shareholders,” said C. Larry Pope, president and chief executive officer. “This year, Smithfield aggressively returned capital to its investors through significant share repurchases. In the last 12 months, we repurchased 11.8 million shares, or 7% of the company, for $242 million. Ongoing share repurchases are a priority.

“Our packaged meats business delivered another outstanding year and, in spite of higher raw material costs, grew operating profit by more than $50 million, or 2c per lb. Our strategy for growth is beginning to pay off, as we continue to coordinate our sales and marketing team approach, focus on our 12 core brands, invest in consumer-focused advertising and build a strong innovation pipeline to grow share and distribution.”

The Pork segment posted operating profit of $623.7 million, down 17% from $753.4 million during the previous year. Sales for the segment were $11,093 million, up 8% from $10,263.9 million.

The Hog Production segment had operating profit of $166.1 million, down 26% from $224.4 million during fiscal 2011. The segment had sales of $3,052.6 million, up 13% from $2,705.1 million.

For the fourth quarter ended April 29 the company as a whole had income of $79.5 million, or 50c per share, down 19% from $98.4 million, or 59c per share, during the same quarter of the previous year. Sales for the quarter were $3,209.2 million, up 3% from $3,116.4 million during the same quarter of the previous year.

“I believe that our packaged meats business affords us the biggest growth opportunities as we more fully evolve into a consumer packaged meats company,” Mr. Pope said. “We are gaining momentum in this business and remain committed to increasing our consumer marketing spending and building a consumer relevant product innovation pipeline to fuel this growth. In fiscal 2013, our stakeholders will see a significant amount of new product innovation. As such, we are increasing our normalized range in packaged meats by 2c per pound to 12c to 17c per lb from 10c to 15c per lb.”

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