The company’s Pork Segment produced record operating profit for the fourth consecutive year. Pork earnings increased 40 percent, Fresh Pork operating profit improved $345 million and Packaged Meats results remained strong at $347 million. Smithfield’s Hog Production segment operating results increased $764 million. Robust demand for US pork exports led to significant margin expansion in fresh pork complex.
Fiscal 2011 fourth-quarter net income was $98.4 million, or $.59 per diluted share, an improvement of $103 million; adjusted EPS of $.85 was record high for the fourth quarter, the fourth consecutive quarter of record year-over-year earnings and consolidated sales increased 7 percent to $3.1 billion. Consolidated operating profit improved $227 million.
Smithfield’s Pork segment produced record fourth-quarter operating profit. Pork earnings increased 77 percent, Fresh Pork operating profit improved by $106 million and Packaged Meats results remained strong at $80 million. Hog Production segment operating results increased $171 million. Strong export demand continued, particularly from Asian markets
Sales increases for the fourth quarter and full year are primarily attributable to higher average unit selling prices in the Pork segment and higher live hog market prices.
"Fiscal 2011 was an outstanding year for Smithfield,” said C. Larry Pope, president and CEO. “This year's earnings far exceeded those of our last record year and demonstrated an important shift in the key drivers of our business model toward consumer packaged meats, as more than two-thirds of our profits were generated by the Pork segment.”
Industry fundamentals were very supportive of record profitability in fiscal 2011, he added. “Strong global demand for pork, coupled with tight supplies, generated record margins in our fresh pork business,” Pope said. “At the same time, Hog Production segment earnings improved significantly, as lower hog inventories boosted live hog market prices and favorable grain hedges yielded raising costs in the mid $50s per hundredweight for the year.
Smithfield continued to leverage its restructured Pork Group to effectively maintain pricing and deliver normalized margins in its packaged meats business despite substantial increases in raw material costs, Pope pointed out.
“This year we accomplished double-digit growth in several of our key strategic brands and product categories including Armour LunchMakers, Curly's Barbecue, Kretschmar Deli and Smithfield Marinade," Pope said.
"Looking forward to fiscal 2012, we expect to improve our packaged meats business and are committed to maintaining strong pricing discipline to deliver margins in our normalized range,” Pope said. “One of our top priorities this year is to achieve profitable top-line growth in our consumer packaged meats business, which will be fueled by increased consumer marketing of our key brands. Balanced supply and demand and strong exports should yield solid fresh-pork margins, although we anticipate that profitability will return to more normalized levels.”
In other news, Smithfield’s board of directors approved a $150 million share repurchase program.