February 18, 2009
Smithfield restructuring to cut 1,800 jobs; closes six plants
Smithfield Foods Inc. plans to streamline its pork operations in a move that will cut 3.4 percent of its work force as the world's largest pork processor and hog producer continues to struggle with concerns about its liquidity.
Shares have lost almost two-thirds of their value since August as the company has tried to strengthen its balance sheet by selling businesses. In recent weeks it has also received amendments under US and European credit lines that eased operating standards to keep Smithfield from violating debt covenants.
Savings of about US$55 million are expected for the fiscal year starting in May, with US$125 million anticipated the following year. The steps include shedding 1,800 jobs and closing six plants this year. It will also eliminate four independent operating companies, leaving Smithfield, John Morrell and Farmland Foods.
Meat processors have been hurt by falling margins amid weakening prices. As a hog producer, Smithfield has also been hurt by surging grain costs the past several years.
Smithfield shares closed Friday at US$9.57 and weren't active premarket.
