November 9, 2011
Smithfield foresees lucrative pork business in next 12 months
Smithfield Foods foresees lucrative pork business over the next 12 months.
The company projected hog production profitability will average in the range of US$10 to US$15 per head over the next 12 months, noting that in recent months, corn prices declined while hog futures prices rose.
Smithfield set a 3% volume growth goal for packaged meats in fiscal 2012, which began in May 2011. It projected packaged meats profits at the high end of the normalised operating profit range of US$0.10 to US$0.15 per pound.
For the 12 weeks ended October 9, Smithfield showed its strongest on-year packaged meat product volume growth in Smithfield brand boneless ham steaks (up 138%), followed by a 23% rise in both branded bacon and tub lunchmeats volume sales.
For fresh pork, Smithfield projected "very strong exports" in fiscal 2012. From January to August this year, Smithfield exported 24% of the pork it produced, compared to 20% during 2010.
Smithfield also outlined what it called a conservative balance sheet, noting liquidity of US$1.2billion compared to a 2012 target of US$500 million to US$1billion. In a chart titled "Uses of excess cash", Smithfield listed "acquire branded packaged meat companies" as one option. Others included reinvesting in packaged meats business, sharing repurchases and extraordinary pension contribution and debt reduction.