Milling Journal

Smithfield, VA—Smithfield Foods, Inc. (NYSE:SFD) reported March 11 fiscal 2010 third quarter results.

The company reported income from continuing operations for the third quarter of fiscal 2010 of $37.3 million, or $.22 per diluted share, versus a loss from continuing operations last year of $108.1 million, or $(.75) per diluted share.

Sales were $2.9 billion versus $3.3 billion in the same period last year.

The third quarter of fiscal 2010 consisted of 13 weeks compared to 14 weeks in fiscal 2009.

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The current quarterly results include a number of significant items, including pre-tax impairment and Pork segment restructuring charges totaling $16.9 million, Campofrio Food Group debt restructuring and discontinued operations charges of $11.7 million, and the income tax impacts of certain discrete items.

Last year's results also included a number of significant items, including gains on the sale of the company's Groupe Smithfield investment and early extinguishment of debt, Pork segment restructuring charges, cattle inventory write-downs, and a mark-to-market adjustment for hog production hedges.

Excluding these items, the prior year loss from continuing operations would have been $24.0 million, or $(.17) per diluted share.

Commentary

"The third quarter demonstrated the ongoing strength of our packaged meats business, which continues to deliver very strong margins.

"We are extremely focused on this part of the business, it is paying dividends and the restructuring program is beginning to have an impact," said C. Larry Pope, president and chief executive officer.

"The action items called for in the Pork Group restructuring plan are complete and the benefits are meeting expectations.

"As of this month, we have closed all six plants that were announced as part of the restructuring plan early last year.

"We are on track to achieve the targeted $55 million of profit improvement this year, after applicable restructuring expenses, and $125 million of annual benefits beginning in fiscal 2011," he continued.

"Much of the success of the Pork Group restructuring plan is attributable to the benefits received from shuttering underutilized plants.

"These plant closures, combined with the rationalization of unprofitable business, have allowed this organization to realize strong bottom line growth.

"While the plan has intentionally caused a loss of volume in the Pork segment, it has resulted in a more competitive and efficient cost base and improved product mix to begin to focus on profitable top line growth," Mr. Pope remarked.

For more information, call 212-758-2100.

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