Smithfield Foods turns corner, CEO says

WILLIAMSBURG

Smithfield Foods Inc. is back making money, its CEO said Wednesday.

After two years of deep losses, "all parts of the business are profitable, and solidly profitable," said C. Larry Pope, Smithfield's president and CEO, at its annual shareholders meeting. "It looks to be pretty good times well into the future."

The only hitch, Pope said, could be reported overseas grain shortages, which could drive up feed costs.

He said he was less worried about the possibility of a double-dip recession.

"Recessions are usually good for the company," Pope said at the Williamsburg Lodge. "We're in the protein sector, where people have to eat, and we're in the moderately priced protein sector."

Smithfield, plagued by high grain costs and low hog prices, lost $198 million in its 2009 fiscal year and $101 million in fiscal 2010. The hog producer and processor will report its earnings for the first quarter of fiscal 2011 on Wednesday.

Its turnaround plan included closing seven plants, including one in Smithfield, and trimming its sow herd by 13 percent.

At the meeting, Pope also said Smithfield had not yet received a response to its $200 million offer to buy out its partner in the Butterball LLC turkey business. Smithfield owns 49 percent and Maxwell Farms Inc. owns 51 percent of Butterball. Pope said Maxwell Farms' deadline is Sept. 11. If it rejects the offer or does not respond, Pope said, Smithfield will pull out of Butterball.

Shareholder resolutions targeting environmental and animal-rights causes were soundly defeated.

Ninety-six percent of voting shareholders opposed a proposal by Calvert Asset Management Co. requesting specific goals for reducing greenhouse-gas emissions at Smithfield's operations.

The Humane Society of the United States asked the company to switch to "controlled-atmosphere killing," using inert gases, of turkeys at Butterball. Ninety-seven percent of voting shareholders opposed the resolution.

But in response to a question from a PETA representative, Pope said Smithfield had recently begun converting from gestation crates to more spacious "group housing" for pregnant pigs - a move long sought by animal-rights groups.

Smithfield in 2007 announced it would phase out the gestation crates by 2017 but later said the economy would force a delay.

Pope told shareholders Wednesday that gestation crates were being eliminated as part of a program to update hog farms. But he did not lay out a deadline for total removal of the crates.

"I'm not going to give you a timetable," Pope said. "But I will tell you that we are leading the industry in that conversion."

Philip Walzer, (757) 222-3864, phil.walzer@pilotonline.com