CHICAGO - Smithfield Foods Inc, known as the largest hog and pork producer in the world, is transforming itself into a packaged-foods company that is less reliant on hogs and lower-margin fresh pork products, its chief executive said on Thursday.
We are on the cusp of changing who this company is, Chief Executive Larry Pope said at the Barclays Capital Back-to-School Consumer Conference. We are emerging as a global leader in the packaged-meats business.
Smithfield will continue to produce hogs and fresh pork, but packaged meats will play a larger role, selling under brand names such as Armour, Eckrich and Farmland.
Smithfield, like other livestock and meat companies, is recovering from a rough 2008 and early 2009 when it was hit by high feed and fuel costs, the economic downturn and H1N1 flu concerns that hurt meat sales.
It launched a restructuring effort that reduced its hog herd and consolidated or closed meat plants.
Our restructuring plan has not yet hit the bottom line, but it is ready, said Pope. We are looking more like a consumer packaged goods company than we are an agribusiness player.
In June, Smithfield reported its first fiscal-year loss in more than 30 years due largely to losses on hogs, and on Tuesday reported a fiscal first-quarter loss of $107.7 million, or 75 cents a share, also due largely to losses on hogs.
Pope called the hog unit Smithfield's Achilles' heel, but added that we are not interested in exiting the hog production business.
He said the company will continue to produce hogs, albeit fewer of them. It has reduced its hog breeding herd by 13 percent, which will translate to about 1.4 million fewer hogs during the current fiscal year that runs through April, said Pope. (Reporting by Bob Burgdorfer; editing by Gunna Dickson)