Smithfield Foods reports full year results

Smithfield Foods reports full year results

Smithfield Foods, Inc., the world’s largest pork producer and processor, reported fiscal 2010 fourth quarter and full year results.

Sales for the fourth quarter of fiscal 2010 were $2.9 billion, up 2% compared to the fourth quarter of fiscal 2009. Sales for the full fiscal year were $11.2 billion compared to $12.5 billion last year. The effect of an extra week in the third quarter of fiscal 2009, combined with lower average unit selling prices, currency fluctuations and planned volume reductions resulting from the Pork Group restructuring plan, all contributed to a year over year decline.

The company reported a net loss in the current quarter of $4.6 million compared to a net loss of $81.2 million last year, an improvement of $76.6 million. For the full fiscal year, the net loss totaled $101.4 million compared to a net loss of $198.4 million in the prior fiscal year, an improvement of $97.0 million. Last year's net loss included income from discontinued operations, net of tax, of $52.5 million, or $.37 per diluted share.

The current quarterly results include a number of significant items affecting pre-tax figures, including a $73.0 million unfavorable mark-to-market adjustment on open derivative positions and charges for a new Hog Production segment cost savings initiative and the final stages of the Pork segment restructuring totaling $12.9 million. The effective income tax rate for the quarter was higher than anticipated and had a favorable impact on earnings because it is applied to a pre-tax loss.

Bid for Butterball

Smithfield announced that it has made an offer to purchase its joint venture partner's 51% ownership interest in Butterball, LLC and its partner's related turkey production assets for approximately $200 million. In accordance with Butterball's operating agreement, Smithfield's partner may either accept the offer to sell or be required to purchase Smithfield's 49% interest and its related turkey production assets.

The company expects to conclude the buy/sell decision no later than September 2010 and close before the end of the calendar year. If Smithfield is the buyer, it will be required to retire Butterball's debt obligations totaling approximately $215 million as of May 2, 2010. Additionally, if Smithfield is the buyer, the company anticipates that a significant amount of capital investment and marketing will be necessary to increase Butterball's earnings potential. Smithfield believes its current liquidity position will be sufficient to finance this transaction. However, the company will evaluate capital alternatives at the appropriate time.
Source: Smithfield Foods, Inc.


With our free newsletters, we can provide you with the most important industry news and useful practical tips from Germany and around the world.