• Net loss shortens to US$101.4m
  • Sales dip to $11.2bn
  • The hog production cycle has turned - CEO
Smithfield CEO Pope upbeat that recovery is on its way

Smithfield CEO Pope upbeat that recovery is on its way

Smithfield Foods has reported narrowing full-year losses despite a slide in its sales figures, with the US meat giant's CEO suggesting that a recovery for the sector had begun.

For the year to 2 May, Smithfield's net loss totalled US$101.4m compared to $198.4m in the prior fiscal year.

Last year's net loss included income from discontinued operations, net of tax, of $52.5m.

Sales for the fiscal year, however, were $11.2bn compared to $12.5bn last year.

“The last two years were by far the most challenging in over 30 years,” said president and CEO Larry Pope.

“The contributing factors - global recessionary conditions, unfounded fears about A(H1N1) and the resultant closures of some key export markets, spiking grain prices and extended low hog prices tied to a significant oversupply of live hogs - are all well documented. These factors, combined with the extremely slow pace of herd liquidation in spite of mounting industry losses, all conspired to make for one of the longest and deepest downturns ever in live hog production."

Nonetheless, Pope was upbeat about current conditions in the sector.

"Finally, the hog production cycle has turned. Live production losses, particularly on the cash side, have abated. Although our fourth-quarter hog production segment results do not yet reflect the full benefits of the recently improved live hog production environment, the recovery in the cash and futures markets for hogs is encouraging and has allowed for significant year over year improvements in that business."

However, Pope added that the company was still dissatisfied with costs within its hog production and said the business is looking at new ways to save costs.

“Although the benefits will not be immediate, the long term impact should be very beneficial," Pope said.

Sales for the fourth quarter of fiscal 2010 were $2.9bn, up 2% compared to the fourth quarter of fiscal 2009. 

The effect of an extra week in the third quarter of fiscal 2009, combined with lower average unit selling prices, currency fluctuations and lower volumes resulting from a restructuring of Smithfield's pork division, all contributed to the year-on-year decline.

The company reported a net loss in the current quarter of $4.6m compared to a net loss of $81.2m last year.