Smithfield Foods, Inc. · NASDAQ:SFD
Smithfield Foods — BMO Capital Markets 2010 Agriculture, Protein & Fertilizer Conference
42 slides from Smithfield Foods's conference presentation, May 19, 2010
Slide 1: BMO Capital Markets 2010 Agriculture, Protein & Fertilizer Conference
Smithfield BMO Capital Markets 2010 Agriculture, Protein & Fertilizer Conference C. Larry Pope, President & CEO Robert W. Manly, EVP & CFO Smithfield Foods, Inc.
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking” statements within the meaning of the federal secu s 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 or
Slide 3: Non-GAAP Measure Reconciliations
Non-GAAP Measure Reconciliations mm Dee, 2009 Sahstefore limbutions Ober segmat BOD "Ad: 40% of Buteballelee 08 Less: Nonvomey ales 0.) Talay subs before eliminions 507 Non GAAP measurerecencation Gnmitiens) Tm ry Fy Jay.2010 2009 anne Operatingproit- Pork sequent 5 ee) SF ‘Add: Porkresractring an i
Slide 4: Agenda
Agenda 1. A Platform For Growth — Larry Pope Category Leadership — Larry Pope Delivering Quality & Consistent Earnings — Bo Manly Financial Management — Bo Manly Exports — Bo Manly Vertical Integration — Larry Pope N Oo A FF WN Why Invest In Smithfield? — Larry Pope Smithfield ¢
Slide 5: A Platform For Growth
A Platform For Growth Smithfield
Slide 6: A Platform For Growth
A Platform For Growth ¢ Focus on profitable top and bottom line growth via consumer packaged meats supported by — Leading positions in the food industry — Portfolio of leading consumer brands — Vertically integrated platform to assure high quality, consistent and traceable supply for consumer packag
Slide 7: Leading Position In Food Industry
Leading Position In Food Industry #1 U.S. Packaged Pork Company #1 World Pork Processor #1 World Hog Producer #1 World Turkey Processor’ #1 Market share in several European countries * Through 49% interest in Butterball, LLC Sources: Information Resources, Inc. (IRI); FreshLook Marketing Group; Succ
Slide 8: Smithfield Brand Portfolio Strength
Smithfield Brand Portfolio Strength Consumers purchase products in the Smithfield brand portfolio more than 1 billion times every year Smithfield °
Slide 9: Core Portfolio of Leading Brands
Core Portfolio of Leading Brands... emia armiant Te smithficia GUmeREAD) CED $1.3 billion $1.2 billion $955 million $550 million Bylorrel KI Cook's: ‘Cork’s ham. Always good t0 the bone* $498 million $402 million @ em, million $375 million nicer mar. il BECURLS ea million ] million $121 million $71
Slide 10: Covering the spectrum of consumer demographics
... Covering the spectrum of consumer demographics ‘Smithfield Gor other leading food companies Gualtzzy Gmtzy ED oe Gy ylorrell Cooks RS ihe Family Value Smithfield‘
Slide 11: Leveraging complementary geographic and market disciplines
...Leveraging complementary geographic and market disciplines Smithfield‘!
Slide 12: Core Portfolio of Leading International Brands
Core Portfolio of Leading International Brands ° 1 Smithfield owns 37% of Campotria Food Group Smithfield! 2
Slide 13: Well-Defined Roles of Strategic Business Units
Well-Defined Roles of Strategic Business Units Packaged Meats log Production (Porkiconeumer (yo oo [ ) Intern Turkey Sales: $9.3 billion Sales: $2.4 billion Sales: $1.2 billion Sales: $0.7 billion Drive profitable growth through leading national and regional consumer brands Provide vertically integr
Slide 14: Category Leadership
Category Leadership Smithfield
Slide 15: Comprehensive Brand Strategy
Comprehensive Brand Strategy Powerful brands that Diverse portfolio of core play to demographics brands that make and regional Smithfield the leading preferences of key supplier to the retail and consumer segments foodservice channels Smithfield'® ces: IRI; FreshLook; Strategic Research Consulting,
Slide 16: Leading Retail Position In Key Consumer Categories
Leading Retail Position In Key Consumer Categories packaged meats categories leading consumer Sources: IRI 52 weeks ending 03/28/10; FreshLook 82 weeks ending 02/21/10 ™ Branded Retail © Private Label Retail Note: Deli Meats, Turkey and Packaged Lunchmeat includes 49% interest in Butterball, LLC; Tu
Slide 17: Consumer-Winning Brands At Retail
Consumer-Winning Brands At Retail sales volume comes from products in the Smithfield brand portfolio 80% 70% 60% 50% 40% 30% 20% 10% 0% Smithfield Industry ™ Branded O Private Label/Other Sources: IRI 52 weeks ending 03/28/10; FreshLook 52 weeks ending 02/21/10 Smithfield! 7 Note: Other includes Unb
Slide 18: The Retail Leader In Branded Consumer Packaged Meats
The Retail Leader In Branded Consumer Packaged Meats across multiple consume segments and more categories than other leading manufacturers Smithfield Sara Lee Bar-S 251. a Hormel Foods Kraft Foods Cargill More Consumer Segments 10 More Categories 0 (1 Sources: IRI52 weeks ending 03/28/10; FreshLook
Slide 19: The Leader In Foodservice Pork
The Leader In Foodservice Pork $3,000 1g 710 ” N ow ° 6 fl n N ° 6 6 fl (in millions) wn oe a [=] f=) \ $1,000 + $662 $552 $500 5 $179 $136 $0 T T T 1 ; 1 Foodservice pork sales ) fe) 2 te) S eK § KK ¥ Po SS eS € Y Smithfield's Source: SRC
Slide 20: A Leader In the Deli
A Leader In the Deli Market share Sources: IRI 52 weeks ending 03/28/10; FreshLook 62 weeks ending 02/21/10 Smithfield” Note: Includes 49% interest in Butterball, LLC; Refer to slide 3 for Non-GAAP measure reconciliations
Slide 21: Delivering Quality & Consistent Earnings
Delivering Quality & Consistent Earnings Smithfield
Slide 22: Pork Segment Earnings Growth
Pork Segment Earnings Growth profitability has more than doubled since fiscal 2007 $600 + 71% + + 6% - $500 , tl = $400 + ies il = 55 +4% 5s & = $300 + =a DE +3% Fo os 1 ox => $200 + PR + 2% & $100 + | $249 | ayy = $0 0% FY 07 FY 08 FYo9 TTMFY10 Q3 Note: FY 09 and TTM FY 10 3 results exclude restruc
Slide 23: Earnings growth driven by consumer packaged meats
Earnings growth driven by consumer packaged meats Pork segment EBIT ($ per head) segment earnings contribution Fresh pork © Packaged meats Note: FY 09 and TTM FY 10 @3 results exclude restructuring and impairments; Refer to slide 3 for Non-GAAP measure reconciliations FY 09 TTM FY 10 Q3 Smithfield”
Slide 24: Consumer Packaged Meats Earnings Growth
Consumer Packaged Meats Earnings Growth earnings engine $600 + 12% $500 + + 10% $400 + 7 8% T 4.6% 7 &% $200 + + 4% $100 + | $185 + 2% Consumer packaged meats EBIT (in millions) A w i=] o Consumer packaged meats EBIT (% of sales) $0 + + + 0% FY 07 FY 08 FYo9 TTM FY10 Q3 Note: FY 09 and TTM FY 10 3 r
Slide 25: Optimizing Consumer Packaged Meats
Optimizing Consumer Packaged Meats growth while optimizing product mix and pricing Go 3 = 3 3 a = 3 m7 to 2 = © = 2 ° > FY 07 FY 08 FY09) TTMFY10 Note: FY 09 and TTM FY 10 Q3 a3 results exclude restructuring and impaitments, Refer to slide 3 for f=" EBIT ($ per pound) ——Volume Smithfield Non-GAAP me
Slide 26: Stable Fresh Pork Profitability
Stable Fresh Pork Profitability remained consistent year after year oe ¢ i} = $4 = a] E 3 £ $3 a] 3 9 a wo A nol rc $2 gS Fa = $1 £ s 3 $0 , + 1 o> FY 07 FY 08 FYo9 TTMFY40 Q3 Note: FY 09 and TTM FY 10 @3 results exclude restructuring and impairments: Refer to slide 3 for [= EBIT ($ per head) —@— Vo
Slide 27: Financial Management
Financial Management Smithfield
Slide 28: Long-Term Debt Maturities
Long-Term Debt Maturities icant urities $1,200 5 until fiscal 2012 no sign debt mati E $1,000 $800 | $600 5 in millions $400 5 $638 $200 5 so | ase PO _ FY 10 FY 11 FY 12 FY 13 FY 14 Smithfield —_-— — we = [=] f=] —_— — oO
Slide 29: Total Debt to Total Capitalization
Total Debt to Total Capitalization 59% 57% 55% 53% 51% 49% AT% 45% 58% 56% 54% 52% FY 07 FY 08 FY09 FY10Q1 FY 10 Q2 FY10Q3 © Debt to total capitalization m Pro forma Note: FY 10 Pro forma debt is net of short-term cash investments Smithfield”
Slide 30: Exports
Exports Smithfield
Slide 31: Export Customer Reliability
Export Customer Reliability remains the margin leader. China and Russia continue to be unreliable markets. [™ Reliable [™ Unreliable Note: FY 10 G3 YTD Smithfield export markets by volume; Other Category consists of sales to the following countries: EU, Australia, Bahamas, Bermuda, Brazil, Bulgaria,
Slide 32: Competiveness of U.S. Pork on World Market
Competiveness of U.S. Pork on World Market $1.40 sien aac i landscape for pork exporting $1.20 countries $1.00 $0.80 — —_ = — = = = > wv @ & o Sd ‘ ¢ ROE aN SN Si SSE R Egor EF ge FX FF KF gv? cd ¢ F ¥ ™ Carcass ($/pound) © Carcass year ago ($/pound) Smithfield”? Note: Week ending 05/01/10
Slide 33: Vertical Integration
Vertical Integration Smithfield
Slide 34: Vertically Integrated Platform Creates Competitive Advantage In Pork Segment
Vertically Integrated Platform Creates Competitive Advantage In Pork Segment * Hog production segment provides vertically integrated platform to assure high quality, consistent and traceable raw material supply * Company manages full value chain from production to processing to consumer packaged mea
Slide 35: Hog Production Return To Profitability
Note: Hog price projections based Smithfield break-even net of interest, Hog Production Return To Profitability This fourth quarter projection does not reflect hedge positions and mark-to-market results quarter of fiscal 2010 and remain above break-even throughout fiscal 2011 (per live hundredweight
Slide 36: Hog Production Group Cost and Operational Improvements
Hog Production Group Cost and Operational Improvements ¢ Long-term multi-year program to improve Smithfield’s overall cost structure * Consolidation in industry and age of Smithfield facilities has eroded historical raising cost advantages ¢ Modest capital investment committed to improve genetic cos
Slide 37: Hog Production Group Cost Savings Initiatives
Hog Production Group Cost Savings Initiatives Replace segments of current herd with lower cost, higher quality breeding stock Farm reconfiguration to eliminate single site farrow to finish farms and small farrow to wean sites to improve health and lower costs Improve animal health, increase producti
Slide 38: Why Invest In Smithfield?
Why Invest In Smithfield? Smithfield
Slide 39: Why Invest In Smithfield?
Why Invest In Smithfield? * Industry conditions TTHos cycle — return to sustained period of profitability T[consumer demand — modest improvements, breakfast spotlight [competitive proteins — current inventories low, less beef, less domestic pork, international pork flat, more chicken SS Exports — hi
Slide 40: Why Invest In Smithfield?
Why Invest In Smithfield? ¢ Highly coordinated approach to marketing maximizes margin and growth opportunities of leading brands across multiple product categories and geographies * Substantially improved cost structure of restructured Pork Group better positions the company to deliver higher earnin
Slide 41: Why Invest In Smithfield?
Why Invest In Smithfield? * Company anticipates sustained profitability in Hog Production segment ¢ Disciplined approach to balance sheet management through — Reduced leverage — Ample liquidity — Extended maturities — Elimination of covenants — Tight controls on capital expenditures — Continued debt
Slide 42: May 2010
May 2010
Smithfield Foods — BMO Capital Markets 2010 Agriculture, Protein & Fertilizer Conference on 6ix