It was roughly one year ago when Smithfield Foods announced it was restructuring in what it called the “One Smithfield” initiative. It appears the company’s new CEO couldn’t be more pleased with how the initiative has worked so far.
Under One Smithfield, the company realigned the business organization to unify all of its independent operating companies, brands, marketing and employees around the world under one corporate umbrella to accelerate its growth. Now, Smithfield’s business operations are organized in alignment with the company’s customers and managed as four divisions – Packaged Meats, Fresh Pork, Hog Production and International.
“2015 will be remembered as the year that the largest pork company in the world got its organizational structure right [and] combined all the acquisitions it spent more than two decades accumulating into a singular cohesive operating company” Sullivan said on March 29 during Smithfield Foods’ earnings call highlighting fiscal year 2015.
While 2014 was Smithfield’s most successful year in terms of operating profits at $932 million, Sullivan noted that figure included $344 in porcine epidemic diarrhea (PED) virus fuled hog farm profits. Without those cyclical hog farm profits, the company made about $587 million in its fresh, packaged and international divisions. In contrast, Smithfield made nearly $775 million in those same divisions, without the cyclicality of the hog farms impacting the numbers, translating into an improvement of about $188 million.
Other highlights for the company since the restructuring, according to Sullivan, include
- Operating profits reached an all-time high in its packaged meats division and solid double-digit EBITDA margins in the division
- A 7.1 percent volume growth and a broad-based market share expansion across numerous brands and product categories
- Smithfield branded retail bacon volume was up by double digits
- Smithfield’s Eckrich deli brand became the fastest-growing deli brand in the U.S. among top brands, exceeding category growth by more than three times.
- Nathan’s, another Smithfield brand, saw its market share climb to nearly 40 percent in the premium hot dog category
- Smithfield prime fresh pork saw a export sales volume growth increase of 7.6 percent
- Forward momentum in the Smithfield international business, despite currency translation losses from a stronger dollar
Sullivan said he fully believes that even though the One Smithfield initiative is already paying dividends, he expects that positive momentum to continue in fiscal year 2016 and beyond.
Sullivan, previously the president and chief operating officer of Smithfield Foods, replaced C. Larry Pope as Smithfield’s CEO upon Pope’s retirement at the end of 2015.