Smithfield’s Manly expresses optimism for 2012
MIAMI – During a Feb. 27 presentation at the J.P. Morgan Global High Yield & Leveraged Finance Conference, Robert, “Bo” Manly, executive vice president and chief financial officer with Smithfield Foods Inc., told analysts that fiscal 2012 will likely not top the company’s 2011, but optimism abounds with exports expected to grow and its emphasis on packaged meat to continue.
With $1.1 billion in annual operating profit on sales of $12.2 billion in fiscal 2011, Manly said, “It’s unlikely we’ll exceed last year’s levels, but we’ll likely have the second-best year in Smithfield’s history.” Smithfield will announce its fiscal third quarter results March 8.
The company’s pork division, including sales of packaged meats and fresh pork, drives nearly three-fourths of its operating profit, which topped $753 million on sales of $10.3 billion in fiscal 2011. “This is the growth area,” he said, with the company’s hog production and international divisions supporting the remaining sales. He pointed out that up to 20 percent of total sales are in the international markets, where Smithfield owns has operations in Romania, Poland, Spain, France, Portugal the Netherlands, Italy and joint ventures in Mexico.
There are between 105 million and 110 million hogs raised in the US each year and Smithfield is raising between 15 million and 16 million of them. Domestically, Smithfield sales are mostly in the retail market (45 percent), followed by foodservice (23 percent) and exports (13 percent). The company is No. 2 in sales to the deli segment, second only to Boar’s Head, according to Manly. He also highlighted plans to renovate the Kinston, NC plant, which will allow the company to produce “the cheapest hot dogs in the United States.”
He said the company continues to invest more in its core brands as that category of packaged meats accounts for 75 percent of that segment’s sales, “which is where the stability and the profitability are.”
In terms of growth, Manly said Smithfield’s Pork Segment will continue to carry the day as it has for the previous four fiscal years, with profitability of $753 million in fiscal 2011 and expectations of $759 million in 2012.