Smithfield ‘base business is fine,’ CEO Pope says

By Derrick Cain

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, Dec. 26, 2013 - Larry Pope, president and chief executive officer of Smithfield Foods Inc., the largest U.S. pork producer, recently told analysts that despite a second quarter loss of $4.2 million the “base business is fine.”

In a Dec. 23 conference call, Pope said the numbers involved with the loss are “a little messy.”

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“I think all of this should be put aside a bit until the first of the calendar year when the numbers will become much clearer and much easier to understand,” Pope said.

Smithfield has pegged the loss on weak results in its pork division and $52 million in expenses associated with its recent acquisition by Shuanghui International Holdings Ltd. of China. Compared with the $4.2 million loss in the second quarter of this fiscal year, the company made a profit of $10.9 million profit in the same period in 2012.

Pope said the company's fresh pork business has been weak for all of this fiscal year as a result of the downturn in exports in three of the main countries “where we have had closed markets in Russia and then China to some degree and also the yen/dollar exchange rate in Japan has impacted the Japanese business fairly significantly.”

Pope said the packaged beef business is “very solid,” and the company continues to be pleased with the growth potential in that business, and the market share that it continues to gain in the packaged meats business.

Pope said 2014 “looks very bright to me” and he expects hog production to have a very strong year. “I'm sure you can see that from the futures market,” Pope said. “We have got some things going in fresh pork that are going to be very good for our business.”

Still, Pope told analysts it has been a messy year and will probably be messy for the next couple months until accounting over the acquisition gets straightened out. “But fundamentally, as we move forward into 2014, Smithfield Foods is in very good shape.”

Smithfield previously announced in early September a decrease in net income of about 32 percent in the first quarter of fiscal year 2013 compared to the same period last year, as well as a 10 percent increase in quarterly sales. This came before the purchase of the company was approved by shareholders.

China is responsible for 50 percent of the world's pork consumption and demand is still growing.

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