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Smithfield Foods Putting H1N1 Flu in Rear-view Mirror

by 5m Editor
14 May 2009, at 10:35am

US - Smithfield Foods CEO C. Larry Pope opened his remarks at the BMO Capital Markets Agriculture, Protein and Fertilizer Conference on Wednesday with a joke.

"I hope all of you have gotten your flu shot," he said, even showing a slide with a picture of a young child kissing the snout of a pig to demonstrate "how to avoid swine flu."

Meatingplace says that Mr Pope can jest now because Smithfield believes the hysteria that blamed the company for the outbreak amounted to "a three-week event" that is "basically behind us."

During the week of 27 April, he noted, the US pork industry saw double digit declines in domestic retail sales, but demand has recovered since that time. Hog prices dipped but have since recovered. Meanwhile, exports have remained "strong" despite some market closures and packaged meats "never suffered."

Asked whether Smithfield expects the H1N1 outbreak to have any lasting effect on the strength of exports, Mr Pope said the "one wild card is when China is going to open up."

Mr Pope declined to speculate on a question about the possibility that a more virulent strain of the flu could break out in the fall.

"This thing's been way overblown — way overblown," he said. "I mean, goodness gracious! For the impact it had on people relative to the news media coverage, it's absolutely crazy. And even the two deaths that happened in the US.... I feel sorry for those people, but those people had other complicated medical issues they were dealing with. And so this is really not a big deal."

The H1N1 scare is the latest in what Mr Pope called an "absolutely unbelievable year" for Smithfield. It's a year that has included selling its beef operations to JBS S.A., which helped the company deleverage and improve its cash position; reducing its sow herd by 10 per cent as the company continues to suffer losses in its pork production business; selling 5 per cent of the company to China trading firm COFCO; restructuring its debt covenants (which Pope reiterated the company will meet); and launching the restructuring of its pork processing business.