August 24, 2006

 

Swift's profits decimated by difficult market conditions

 

 

A difficult market, the most challenging Swift & Co ever had to face, caused profits to fall like a tonne of bricks, dropping from US$163 million in 2005 to just US$6 million this year on an EBITDA (earnings before interest, taxes, depreciation and amortization) basis.

 

Swift & Co is the world's scond-largest processor of beef and pork products.

 

Sam Rovit, chief executive, said business conditions during the fiscal year were among the most difficult in the history of the industry.

 

High live US cattle costs, lower beef selling prices and a continued lack of access to major Asian export markets combined to yield the dismal results, he said.

 

Mother nature also conspired against the company as weather effects hampered the company's Australian beef operations.

 

Producers in southern Queensland kept their cattle from the market as the weather created perfect grazing conditions, thus leading to a shortage of live cattle for the company.

 

Even though beef sales only slipped slightly to US$5.58 billion from US$5.60 billion, losses in this sector increased to US$97 million from US$65 million.

 

Pork sales fell more drastically from US$2.24 billion to US$2.07 billion as earnings fell to US$73 million from US$112 million on an operating basis.

 

Australian sales fell 6.7 percent, to US$1.75 billion from US$1.87 billion, with EBITDA earnings plummeting to US$29 million from a record US$106 million just a year earlier.

 

In the US, Swift owns 5 beef processing plants and 3 pork processing plants, mostly in the Mid-west region of the US. In Australia, it owns 4 beef processing plants and feedlots.

 

The company recently sold its non-fed cattle business to XL Foods Inc, a Canadian beef-processing company.