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April 12, 2005

USA: Swift & Co announces higher Q3 sales

US meat processor Swift & Company has reported a 6.2% increase in sales in its third quarter ended Feb. 27, 2005.

US meat processor Swift & Company has reported a 6.2% increase in sales in its third quarter ended 27 February 2005.

Net sales for Swift & Company rose $132.7m in the quarter to a total of $2.26bn versus $2.13bn in the same period one year ago. Higher selling prices helped offset declines in sales volume across the board, it said.

Despite continued weakness in Swift Beef, Swift & Company reported EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) of $4.4m — an improvement of $31.7m over the loss of $27.4m recorded in the third quarter of the previous year.

The company’s US beef business, like that of its industry peers, reflects the continued closure of export markets as a result of concerns about BSE in the world beef market. Sales for Swift US beef did increase, however, over year-ago levels.

While BSE-related factors continued to set the tone for the performance of the US beef industry, Swift continued its steps to strategically diversify its approach to the segment, it said. During the third quarter, Swift realigned its first-processing capacity to free up the entire second shift of its Greeley beef plant for production of higher-margin, value-added products, a realignment made possible by the transfer of first-processing volume from Greeley to untapped production capacity at the company’s beef plants in Grand Island, Nebraska and Cactus, Texas. Early results from the Greeley value-added initiative suggest a positive impact on both growth and profitability.

“We are very pleased with the early returns from our value-added program in Greeley,” said John N. Simons, president and CEO of Swift & Company. “While there are lingering challenges in the international beef market, the value-added product category offers the beef industry’s most significant growth and profit potential.”

Simons also noted that Swift’s anticipation of changes in the US market enabled it to strategically realign company-owned production facilities and utilize existing resources for the new value-added processing without expending funds to buy or build new facilities. This enabled Swift to operate its other fed cattle processing plants at higher production levels, maintaining production volumes while the second shift at Greeley focuses on higher-margin products.

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