Fresh pork and packaged meats boost Smithfield Foods earnings
For the 13 weeks to 2 October 2016, the processor recorded $143.8m in net income, compared to $83.3m for the same period in 2015.
Its fresh pork and packaged meat divisions were the main drivers of growth over the quarter. Fresh pork saw a $62.6m increase in operating profit which was attributed to lower live hog markets prices resulting from higher hog supplies in the US, however these lower live hog market prices also led to a $12.6m decrease in hog production operating costs.
Packaged meats’ operating profit grew $24.5m which was down to higher selling prices and volumes. Looking ahead, Smithfield Foods president and CEO Ken Sullivan earmarked packaged meats as a growth area.
Packaged meat ‘gains’
“Our most exciting growth prospect is the ongoing development of our packaged meats business. Although we have experienced meaningful and consistent improvement in packaged meats margins, we believe significant growth potential remains. We will continue to strengthen our consumer-focused marketing programs and promote innovation to improve our product mix toward branded, value-added products. We expect these actions to result in continued broad-based gains in packaged meats sales, volume, market share, distribution and margins.”
He added that it “did not know the full economic implications” of the recently passed legislation which created a national standard of disclosure for food products containing genetically modified organisms or bioengineered ingredients.
Smithfield Foods said its 2015 restructure and positive results so far this year will help “solidify” its position as a global leader in branded packaged meats. Moving forward it hopes to take advantage of growth opportunities such as leveraging Smithfield’s size and scope in pork industry; maximizing manufacturing platform and distribution system; approaching the market more efficiently and effectively; providing better customer service; optimizing operations in areas like brand management, manufacturing, sales, and marketing; and strengthening marketing, brand building and innovation across all brands.
