Pork prices are still reasonable for consumers, but they'll keep going up, a Smithfield Foods Inc. executive predicted last week.
Retailers have curbed cost increases, but "I think the American consumer is going to have to put up with higher prices," said George Richter, president and chief operating officer of Smithfield's Pork Group. "I don't know how high, though." Richter's predictions were reported in the Virginian-Pilot.
Richter spoke at the company's Smithfield headquarters as part of its first Investor Day. Throughout the day, executives offered slide-packed presentations on subjects from hog production to sales and marketing to convince analysts and shareholders of the company's robust outlook.
After two years of fiscal losses, Smithfield reported record profits in each of the past two quarters.
"We want to try to deliver to you a much more consistent earnings stream," said C. Larry Pope, president and chief executive officer of Smithfield, the world's largest pork processor and hog producer. "The future is extremely bright," Pope added. "We've got a balance sheet that's never been in better shape."
Smithfield has reduced its debt from $4 billion two years ago to $2.5 billion, he said, and hopes to drive it down an additional $500 million before the end of its current fiscal year. That would reduce interest payments by $100 million a year.
Its international division is growing more profitable, with significant gains in Poland and Mexico. And Pope predicted continued profits in its once-weak hog production business, even if corn prices shoot up.
He noted that packaged meats account for two-thirds of the profit in the pork sector. "Smithfield is in a new era," Pope said. "We are evolving into a consumer packaged-goods company."