"These losses are the result of the sizable and unexpected run-up in the futures curve for lean hogs for the summer and fall months of 2010," the company said of its hog segment during an investor meeting.
Hog futures at the Chicago Mercantile Exchange have sped higher in April and are now the highest since August 2008, largely due to a government report in late March that showed a smaller-than-expected hog herd.
Smithfield, like many hog producers, uses futures to hedge hog sales. If futures rise too quickly, as they did this year, the higher cost of exiting, or buying back, those hedges can affect earnings.
"The ballgame changed with USDA's end-of-March quarterly supply report. Instead of supplies being 2 percent under last year for this summer, they will now be 4 percent lower," said Rich Nelson, analyst with Allendale Inc. "That, along with pork exports, has caused a dramatic price rally," said Nelson.
U.S. hog producers including Smithfield aggressively reduced herds beginning in 2009 after suffering nearly two years of losses. In late March, USDA reported the U.S. hog herd as of March 1 was down 3 percent from a year earlier, while analysts had expected a 2 percent decline.
In addition, the report showed there would be 4 percent fewer hogs this summer.
"We continue to believe that Smithfield's efforts to improve its pork operations, restructure its hog business, and deleverage its balance sheet are the right courses of action," Kenneth Zaslow, BMO Capital Markets analyst, said in a note following Smithfield's announcement.
Texas firm recalls beef trim productsBeltex Corporation, a Fort Worth, Texas, establishment, is recalling approximately 135,500 pounds of beef trim products that may be contaminated withE. coliO157:H7, the U.S. Department of Agriculture's Food Safety and Inspection Service announced.
Products subject to recall include various-size boxes of Frontier Meats products, including beef trimming, kidney fat and boneless navel. Each box bears the establishment number "EST. 07041B" inside the USDA mark of inspection on a label. The products were produced on Oct. 28, 2009, Nov. 20, 2009, Feb. 19, 2010, or April 2, 2010, and were distributed to wholesalers and other federal establishments in the States of Georgia, Louisiana, Ohio, Oklahoma, Texas, Washington and Wisconsin.
The problem was discovered by FSIS during a routine Food Safety Assessment performed at the establishment. FSIS has received no reports of illnesses associated with consumption of these recalled products.
Meat industry already reducing sodium content, AMI saysThe American Meat Institute said that the Institute of Medicine’s (IOM) recommendations to increase the availability of reduced sodium foods is consistent with efforts already under way by the meat industry to offer more reduced sodium processed products.
Fresh, unprocessed meat and poultry products are naturally low in sodium. Sodium is added to processed products to add flavor, improve texture and enhance shelf life. Sodium also plays an important role in food safety. Salt was originally used to preserve meats before refrigeration and continues to play a key role in preventing bacterial growth and spoilage.
“Providing more reduced sodium options is an important goal that is consistent with national public health efforts,” AMI Director of Scientific Affairs Betsy Booren, Ph.D., said. “However, it is not as easy as simply adding a few less shakes to a product.”
According to Booren, manufacturers must carefully weigh palatability issues, safety concerns and long-established taste preferences. “It’s important to produce reduced sodium products that are safe and acceptable,” she noted. “If consumers don’t like the taste and texture, the salt shaker is just a reach away. And, of course, we must use extreme caution in reducing any ingredient that could potentially impact the safety of our products.”
Booren also expressed strong concern about an IOM recommendation to change salt’s long-established GRAS (generally recognized as safe) status, which allows an ingredient to be used in foods without seeking special permission. “Suggesting that salt should no longer have GRAS status sends conflicting information because salt helps make food safe. It also is essential to health, though it must be eaten in moderation,” she said. Booren also noted that if GRAS status were removed, the Food and Drug Administration would need to embark upon a lengthy and painstaking process to set individual sodium levels for thousands of food products – a process that could take years and consume valuable resources when voluntary efforts are already under way. “Many companies are actively engaged in a step-wise reformulation so that consumers can gradually become accustomed to the taste of lower sodium products,” she said. “Let’s allow reformulation efforts to work before doing something as dramatic and as massive in regulatory resources as revoking salt’s GRAS status.”
Booren said education efforts designed to help consumers understand how to make better use of nutrition information are prudent, but questioned the degree to which the government should engage in efforts that limit personal choices by regulating sodium levels in products. “If a consumer genuinely enjoys a saltier product like pickles, pretzels or country ham on occasion, is it really appropriate for the government to regulate these products’ distinct tastes away?”
McDonald's announces strong Q1 results worldwideMcDonald's Corp. announced strong results for the first quarter driven by all areas of the world.
"McDonald's compelling menu, unmatched convenience and unbeatable value generated another strong quarterly performance," said CEO Jim Skinner. "For the first quarter, we delivered comparable sales and guest count growth in each geographic segment along with global double-digit operating income growth. As we move forward, we will continue to pursue opportunities to extend our relevance, sustain our momentum and create ongoing excitement for our customers."
Global comparable sales increased 4.2%, with the U.S. up 1.5%, Europe up 5.2% and Asia/Pacific, Middle East and Africa up 5.7%. For the first quarter, the U.S. business drove sales and market share increases by providing outstanding value across the entire menu, contributing to the segment's 12% operating income increase, led by its new coffee beverages and its value menus, the company said.
Source: McDonald’s Corp.
Wingstop announces wing milestone, new ownerWingstop, one of the fastest growing chains in the country, this week announced the company and its network of more than 440 restaurants has sold 2 billion wings. The announcement was made during the company's national convention at the Palms Casino Resort in Las Vegas. Wingstop executives, staff, franchise brand partners and vendors were on hand throughout the three-day event.
The company also announced that private equity firm Roark Capital Group has acquired Wingstop, and in addition revealed the chain's new interior store design.
"This year's convention celebrated some of the most magnificent milestones we've achieved in our brand's 16-year history," said Jim Flynn, Wingstop CEO. "Not only did we reach 2 billion wings, but we are closing in this year on the 500th store. Add to that our new relationship with Roark and this is an exciting time to be a part of the Wingstop family."
Wingstop, which was founded in 1994, first reached one billion wings sold in 2007.
"Due to the quick pace that we've been adding stores, we were able to achieve in three years what originally took 13 years," added Flynn. "We owe our franchise network, dedicated staff and, most importantly, our loyal guests, a huge thank you."