After its stock plunged to a seven-year low Friday, Smithfield Foods Inc. sought to reassure investors with a statement that it is "on very sound financial footing" and has more than $500 million "in liquidity from committed lines of capital."
Smithfield's shares closed at $17.11 on the New York Stock Exchange, down 53 cents from Thursday. At midafternoon, they were at $13.98, their lowest point since March 2001.
"Concerns regarding the firm's liquidity and ability to meet debt covenants" drove Friday's drop, said Farha Aslam, a stock analyst with Stephens Inc.
Smithfield's statement, which the company said was released "given the recent turmoil in portions of the protein industry," said it expected to be in compliance with all of its financial covenants through the end of its fiscal year in April.
It also said it has "no significant debt payments due until late into calendar 2009" and it expects its hedging positions "to be favorable to the company's results in the current quarter."
In other Smithfield news:
- Smithfield Packing Co., a division of Smithfield Foods, has laid off 21 employees in Virginia and North Carolina in its transportation and logistics departments, spokesmen said Friday.
The layoffs, which occurred about two weeks ago, involved salaried workers and did not affect plant employees, said Dennis Pittman, a spokesman for Smithfield Foods. They were driven by a move toward "improved efficiency and job consolidation," Pittman said.
- Smithfield's Farmland Foods division reached a contract agreement with the United Food and Commercial Workers union, averting a strike at a pork plant in Denison, Iowa, the union said. The union represents about 1,400 workers at the plant.
Bloomberg News contributed to this report.
Philip Walzer, (757) 222-3864, phil.walzer@pilotonline.com
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