Smithfield reports higher sales, lower income

by Meat&Poultry Staff
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SMITHFIELD, Va. – Lower margins in fresh pork contributed to 31 percent decline in income for Smithfield Foods, Inc. during fiscal 2012.

For the year ended April 29, the company had income of $361.3 million, equal to $2.23 per share on the common stock, which compared with income of $521 million, or $3.14 per share, during fiscal 2011. Sales for the year were $13,094.3 million, up 7 percent from $12,202.7 million.

“Fiscal 2012 net income represented the second best year in Smithfield history — following a record year in fiscal 2011 — and underscored our ability to continue to deliver solid earnings to our shareholders,” said C. Larry Pope, president and chief executive officer. “This year, Smithfield aggressively returned capital to its investors through significant share repurchases. In the last 12 months, we repurchased 11.8 million shares, or 7 percent of the company, for $242 million. Ongoing share repurchases are a priority.

“Our packaged meats business delivered another outstanding year and, in spite of higher raw material costs, grew operating profit by more than $50 million, or 2 cents per lb. Our strategy for growth is beginning to pay off, as we continue to coordinate our sales and marketing team approach, focus on our 12 core brands, invest in consumer-focused advertising and build a strong innovation pipeline to grow share and distribution.”

The Pork segment posted operating profit of $623.7 million, down 17 percent from $753.4 million during the previous year. Sales for the segment were $11,093 million, up 8 percent from $10,263.9 million.

The Hog Production segment had operating profit of $166.1 million, down 26 percent from $224.4 million during fiscal 2011. The segment had sales of $3,052.6 million, up 13 percent from $2,705.1 million.

For the fourth quarter ended April 29 the company as a whole had income of $79.5 million, or 50 cents per share, down 19 percent from $98.4 million, or 59 cents per share, during the same quarter of the previous year. Sales for the quarter were $3,209.2 million, up 3 percent from $3,116.4 million during the same quarter of the previous year.

“I believe that our packaged meats business affords us the biggest growth opportunities as we more fully evolve into a consumer packaged meats company,” Pope said. “We are gaining momentum in this business and remain committed to increasing our consumer marketing spending and building a consumer relevant product innovation pipeline to fuel this growth. In fiscal 2013, our stakeholders will see a significant amount of new product innovation. As such, we are increasing our normalized range in packaged meats by 2 cents per lb. to 12 cents to 17 cents per lb. from 10 cents to 15 cents per lb.”

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