Smithfield Foods, Inc. · NASDAQ:SFD
Smithfield Foods — Conference Presentation (July 2009)
25 slides from Smithfield Foods's conference presentation, Jul 8, 2009
Slide 1: Larry Pope, President and Chief Executive Officer, Smithfield Foods
C. Larry Pope President and Chief Executive Officer Smithfield Foods, Inc. July 8-9, 2009
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains "forward-looking" statements within the meaning of the federal securities laws. The forward-looking statements include statements concerning the Company's outlook for the future, as well as other statements of beliefs, future plans and strategies
Slide 3: Smithfield
Smithfield
Slide 4: Market Leader: Hog Production
#1 Hog Production * Operating Loss: $(521.2) million • World’s largest hog producer *Note: Fiscal 2009 sales (before eliminations) and operating loss Source: United States Industry Data Successful Farming 1 The majority of hogs from Prestage Farms and Goldsboro Hog Farm are sold to Smithfield Foods,
Slide 5: Market Leader: Pork
#1 Pork * Sales: $10.5 billion Operating Profit: $395.2 million • World’s largest pork processor • Processed 33 million hogs in FY09 • Sold approximately 4.5 billion pounds of fresh pork in FY09 • Sold approximately 3.1 billion pounds of packaged meats in FY09 *Note: Fiscal 2009 sales (before elimin
Slide 6: Market Leadership: International
International * Sales: $1.4 billion Operating Profit: $34.9 million • Subsidiaries in Poland, Romania and the United Kingdom • 37% ownership of Campofrío Food Group (public company) with production facilities in Belgium, France, Italy, The Netherlands, Portugal and Spain • Joint ventures or major in
Slide 7: Market Leader: Turkey Processing
#1 Other Segment * Sales: $251 million Operating Loss: $(46.6) million • Comprised of turkey production operations, 49% interest in Butterball, remaining live cattle operations and interest in live cattle joint venture operations • Butterball is the largest turkey processor in the U.S. *Note: Fiscal
Slide 8: What we have been doing
What we have been doing
Slide 9: Proactively Managing the Business
February 2008 Initial Five Percent Reduction of Smithfield U.S. Sow Herd Reduction of 50,000 sows and production of 900,000 fewer market hogs annually April 2008 Senior Management Changes Strengthened overall management team to improve operations and financial performance July 2008 $400 Million Conv
Slide 10: Proactively Managing the Business
July 2008 Sale of 4.95 Percent of Shares to China's COFCO Limited Improved liquidity and created long term relationship with one of China’s leading trading companies October 2008 Sale of Beef Processing and Cattle Feeding Operations to JBS Significantly improved liquidity and refocused on core busin
Slide 11: Proactively Managing the Business
December 2008 Merger of Campofrío and Groupe Smithfield Formed leading European packaged meats company and monetized joint venture into publicly-traded company February 2009 Successfully Negotiated New Covenant Amendments Improved financial stability through bottom of hog cycle February 2009 Pork Gr
Slide 12: Proactively Managing the Business
June 2009 Additional Three Percent Reduction of Smithfield U.S. Sow Herd Reduction of 30,000 sows and production of 540,000 fewer market hogs annually July 2009 Secured New Credit Line, Completed $625 Million Senior Secured Notes Offering and Replaced Term Loan Provided clear path to repayment of ne
Slide 13: Pork Group restructuring plan
Pork Group restructuring plan
Slide 14: Pork Group Restructuring Plan
Pork Group Restructuring Plan • Streamline Pork Group structure by reorganizing management team under George Richter • Consolidate seven IOC’s into three and close six processing plants • Merge three fresh pork sales organizations into two and consolidate three overseas export teams into one to impr
Slide 15: Improvement from Restructuring
Improvement from Restructuring
Slide 16: Estimated EBT Impact from Restructuring
(in millions) FY09Q3 FY09Q4 FY10 1 FY11 1 Total 1 Plant consolidation capital requirements - $3 $49 - $52 One time expenses $12 $2 $23 - $37 Non-cash asset write-off $73 $1 - - $74 EBT Improvements - - $55 $125 1 Estimated EBT Impact from Restructuring
Slide 17: Estimated Packaged Meats Margin Growth
Smithfield estimates $80 million in annual EBT improvement in packaged meats as a result of restructuring 1 Before restructuring charges 2 Estimated Packaged Meats Margin Growth
Slide 18: Liquidity and refinancing
Liquidity and refinancing
Slide 19: Improved Liquidity
Smithfield continues to improve liquidity and has reduced debt by over $890 million from the previous fiscal year Note: Amounts reflect unused borrowing capacity under U.S. credit facility at quarter end and do not include cash balances reflected on balance sheet Improved Liquidity
Slide 20: Ongoing Debt Restructuring Efforts
Ongoing Debt Restructuring Efforts • New Credit Line - - Entered into new $1 billion asset- based revolving credit facility that replaces the previous U.S. revolving credit facility – Begins to reduce exposure to financial covenant risk • $625 Million Senior Secured Notes Offering - - Proceeds to re
Slide 21: Smithfield
Smithfield
Slide 22: World Pork Prices
Note: Week ending June 20, 2009 U.S. pork prices are among the lowest on the worldwide market World Pork Prices
Slide 23: Smithfield Fresh Pork Exports
Note: January FY2009 five weeks versus January FY2008 and January FY2007 four weeks Smithfield fresh pork exports continue at near year ago levels Smithfield Fresh Pork Exports
Slide 24: U.S. Monthly Pork Exports
U.S. exports of pork and pork variety meats continue at near year ago levels Source: USDA Foreign Agricultural Service (FAS) U.S. Monthly Pork Exports
Slide 25: Smithfield
Smithfield
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