ex99.1 November 2011 Investor Presentations

EX-99.1 2 sfdex991november2011invest.htm PRESENTATION ex99.1 November 2011 Investor Presentations

Forward-Looking Statements

This presentation contains “forward-looking” statements within the meaning of the federal securities 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 anticipated events, and similar expressions

concerning matters that are not historical facts. The Company’s forward-looking information and statements

are subject to risks and uncertainties that could cause actual results to differ materially from those expressed

in, or implied by, the statements. These risks and uncertainties include the availability and prices of live

hogs, raw materials, fuel and supplies, food safety, livestock disease, live hog production costs, product

pricing, the competitive environment and related market conditions, risks associated with our

indebtedness, including cost increases due to rising interest rates or changes in debt ratings or

outlook, hedging risk, operating efficiencies, changes in foreign currency exchange rates, access to capital, the

cost of compliance with changes to regulations and laws, including changes in accounting standards, tax

laws, environmental laws, agricultural laws and occupational, health and safety laws, adverse results from on-

going litigation, actions of domestic and foreign governments, labor relations issues, credit exposure to large

customers, the ability to make effective acquisitions and dispositions and successfully integrate newly

acquired businesses into existing operations, the Company’s ability to effectively restructure portions of its

operations and achieve cost savings from such restructurings and other risks and uncertainties described in

the Company’s Annual Report on Form 10-K for fiscal 2011. Readers are cautioned not to place undue reliance

on forward-looking statements because actual results may differ materially from those expressed in, or

implied by, the statements. Any forward-looking statement that the Company makes speaks only as of the

date of such statement, and the Company undertakes no obligation to update any forward-looking

statements, whether as a result of new information, future events or otherwise. Comparisons of results for

current and any prior periods are not intended to express any future trends or indications of future

performance, unless expressed as such, and should only be viewed as historical data.

Non-GAAP Measure Reconciliations

Smithfield At A Glance

Fiscal 2011 Sales=$12.2 billionFiscal 2011 Operating Profit=$1.1

billion

PorkSales=$10.3 billionOperating Profit=

$753 million

Fresh PorkSales=$4.6 billionOperating Profit=

$407 million

Packaged MeatsSales=$5.7 billionOperating Profit=

$347 million

Hog ProductionSales=$2.7 billionOperating Profit=

$224 million

International

Sales=$1.3 billion

Operating Profit=

$116 million

New.Smithfield trans.png

Note: Segment sales before inter-segment eliminations; Fresh Pork and Packaged Meats results represent management’s estimated allocation of total Pork Segment results

Sales by Segment

Hog Production

19%

International

Packaged Meats40%

Fresh Pork32%

Total Pork72%

Pork segment

accounted for

nearly three-

quarters of

segment sales in

fiscal 2011

Note: Segment sales before inter-segment eliminations

Leading Positions In Pork Industry

28%

Others27%

Tyson17%

JBS11%

Cargill9%

Hormel8%

Pork Processing

Sources: National Pork Board Spring 2009; U.S. Pork Powerhouses2011

New.Smithfield trans.png

14%

Triumph6%

Others70%

Hog Production

Seaboard

Maschhoffs

Prestage

New.Smithfield trans.png

#1 U.S. Packaged Pork Company

Retail45%

Foodservice23%

Export13%

Deli7%

Processor/Industrial12%

Sales

Retail39%

Foodservice16%

Export16%

Deli3%

Processor/Industrial26%

Volume

Note: FY 11 Pork segment sales and volume before inter-segment eliminations

#1Supplier to

RetailFoodserviceExport

#1Supplier to

RetailFoodserviceExport

Consumer-Winning Brands

Cooks.eps

http://www.trademarkia.com/services/logo.ashx?sid=77949721

http://www.trademarkia.com/services/logo.ashx?sid=77914462

Eckrich_Logo.eps

New.Smithfield trans.png

http://doclibrary.com/BRO222/CMM/Farmland%20Logo%20New%20Mar03.jpg

Private

Label/Other24%

Core

Brands65%

Non-Core

Brands11%

Branded76%

HealthyOnes_Logo.png

Margherita1_Logo.eps

Carando Logo4C.eps

Curly's logo only_CMYK.eps

Kretschmar_Logo.eps

http://www.fancyfoodsinc.com/images/phocagallery/thumbs/phoca_thumb_l_gwaltney-logo%20-vector.jpg

Note: Based on FY 12 Q1 Pork segment packaged meats retail volume, including deli and direct store delivery

More than three-

quarters of Smithfield’s

packaged meats sales

are branded

Core brands

account for

85% of

branded

Earnings Growth Driven By Pork Segment

$219

$449

$483

$573

$753

$113

$137

$100

$200

$300

$400

$500

$600

$700

$800

FY 07

FY 08

FY 09

FY 10

FY 11

FY 11 Q1

FY 12 Q1

Pork segment adjusted

operating profit(in millions)

Fresh pork

Packaged meats

Total Pork Segment

Note: Results represent management’s estimated allocation of total Pork Segment results; FY 09 and FY 10 results adjusted for restructuring and impairment charges; Refer

to Non-GAAP measure reconciliations

Pork segment has produced four

consecutive years of record

earnings and tripled profitability

since fiscal 2007

Packaged Meats

Note: Results represent management’s estimated allocation of total Pork Segment results; FY 09 and FY 10 results adjusted for restructuring and impairment charges; Refer

to Non-GAAP measure reconciliations; Sales before inter-segment eliminations

Fiscal 2011

Fiscal2012

Sales

$5.7 billion

Volume

2.7 billion

pounds

˜3%

volume

growth goal

Operating

Profit

$346.9

million

Normalized

OperatingProfit Range

10to 15

centsper

pound

High end of

normalized

operating

profit range

$0.06

$0.10

$0.12

$0.17

$0.13

$0.11

$0.17

4.6%

5.6%

6.9%

9.6%

6.1%

5.3%

7.5%

FY 07

FY 08

FY 09

FY 10

FY 11

FY 12

Adjusted Operating profit ($ per pound)

Adjusted Operating profit (% of sales)

Achieving Strategic Branded Growth

17%

-1%

-2%

16%

12%

11%

138%

23%

13%

Boneless Ham

Steaks

Bacon

Tub

Lunchmeats

BBQ

Smoked Dinner

Sausage

Portable

Lunches

YOY Volume Growth

Category

Smithfield Total

Smithfield Lead Brand

Source: Information Resources, Inc. (IRI) 12 weeks ending 10/09/11

Product Innovation

ArmourLunchkitwith Apples

New ArmourActive Packs offers

lunchkitswith better-for-you ingredients

for consumers with active lifestyles

ArmourLower Sodium Pepperoni

Innovative full-flavor product packs 50

percent less sodium than regular

pepperoni

Smithfield PouchPackBaconInnovative package design breaks

ground for industry and consumers with

two stay-fresh pouches each containing

six slices of bacon

PP Product Shot.png

Convenience

Health &

Nutrition

Packaging

Brand Activation

Billboards

Consumer

Promotions

Digital

FSIs

Radio

Retail POS

Social Media

Television

Commercials

Website

PP Ad Slick.png

726281 Dinner Sausage Ad-15-8-11.jpg

image002

Actual Ham Shop Multideck Display.jpg

Smithfield has

increased its

consumer

marketing

spending by

20% this year

Fresh Pork

$15

0.9%

3.4%

2.0%

1.9%

8.9%

4.0%

2.8%

FY 07

FY 08

FY 09

FY 10

FY 11

FY 12

Adjusted Operating profit ($ per head)

Adjusted Operating profit (% of sales)

Fiscal 2011

Fiscal2012

Sales

$4.6 billion

Balanced

domestic

supply &

demand

Verystrongexports

Volume

27.3 millionhogs

Operating

Profit

$406.5

million

NormalizedOperating

ProfitRange

$3-7per

head

Abovenormalized

operating

profit range

Note: Results represent management’s estimated allocation of total Pork Segment results; FY 09 and FY 10 results adjusted for restructuring and impairment charges; Refer

to Non-GAAP measure reconciliations; Sales before inter-segment eliminations

Improved

outlook

Improved

outlook

Exports

China-HK26%

Japan26%

Mexico22%

Korea7%

Russia6%

Other13%

Smithfield FY 12 Q1

Export Markets by Volume

.Volume +13% YOY

.Dollars +28% YOY

Note: Live hog cost estimate week ending 10/22/11; EU is average of Denmark, France, Germany, Hungary, Netherlands, Poland, Romania and Spain; FY 12 Q1 Smithfield

export markets; Other Category consists of the following countries: Angola, Aruba, Australia, Bahamas, Bermuda, Canada, Caribbean, Chile, Columbia, Costa

Rica, Croatia, Cuba, Dominican Republic, Ecuador, El Salvador, Guam, Guatemala, Haiti, Honduras, EU, Indonesia, Macedonia, Malaysia, New Zealand, Panama, Peru, Puerto

Rico, Singapore, Tahiti, Ukraine, Uruguay, Venezuela, Vietnam, Philippines, Taiwan

$0.67

$0.69

$0.74

$1.21

$1.22

$1.32

$1.66

Mexico

U.S.

China

South Korea

Russia

Japan

Economics Supportive of

U.S. Pork Exports

Live Hog Price Estimate ($ per pound)

Pork Exports Trending To Record

19%

22%

Industry

% of Pork Production Exported

2000

2010

January-August 2011

20%

24%

Smithfield

World

population has

increased

almost 17%

Global GDP has

nearly doubled

World hog

inventories

have declined

Strong growth

in U.S. pork

exports

Since 2000…

Hog Production

$15

$(26)

$(28)

$13

$17

$30

12.1%

-1.1%

$(1)

-20.2%

-22.5%

7.9%

9.9%

15.2%

FY 07

FY 08

FY 09

FY 10

FY 11

FY 12

Adjusted Operating profit ($ per head)

Adjusted Operating profit (% of sales)

Fiscal 2011Fiscal2012

Sales

$2.7

billion

Continued

low global

protein

inventories

Raising

costs in mid

$60s

Volume

16.4 millionhogs

AdjustedOperating

Profit

$214.6

million

NormalizedOperating

ProfitRange

$10-15 per

head

Normalized

operating

profit range

Improved

outlook

Note: FY 10, FY 11, and FY 12 Q1 results adjusted for certain significant items; Refer to Non-GAAP measure reconciliations; Sales before inter-segment eliminations

Improved

outlook

Improved Hog Production Outlook

Corn prices

have

declined

while hog

futures have

increased

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

ISU Model

Cost of Production

09/08/11

11/01/11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Live Hog Futures

09/08/11

11/01/11

Note: Industry cost of production based on futures curve for grains on 11/01/11; cost is pre-interest

$4 per

hundred-

weight

$1 per

hundred-

weight

Hog Production Profitability

Industry hog production

profitability averages

normalized range of $10-15 per

head for next twelve months

Note: Industry profitability based on futures curves for live hogs and grains on 11/01/11; cost is pre-interest

$55

$60

$65

$70

$75

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

$ per hundredweight

ISU Model Cost of Production

Live Hog Futures

Sensitivity Analysis

$1 per

bushel in

corn

$10 per

head

$50 per

ton in

soybean

meal

$3 per

head

$5 per cwt

in live hog

price

$13 per

head

International

$46

$128

$116

$25

FY 07

FY 08

FY 09

FY 10

FY 11

FY 12

Operating profit ($ in millions)

Fiscal 2011

Fiscal2012

Sales

$1.3

billion

Continued

high raw

material

costs & soft

demand

Sequential

improvement

from Q1

Operating

Profit

$115.9

million

NormalizedOperating

ProfitRange

$50-125million

Below

normalized

operating

profit range

Note: Sales before inter-segment eliminations

Balance Sheet

$68.6

$65.5

$60.3

$51.0

$48.1

FY 11

FY 12

Q2*

FY 12

Q3*

FY 12

Q4*

Quarterly Interest Expense ($ in millions)

Project 100

Goal =

$45 million

*Estimate

Balance Sheet

Weakness to Strength

•Eliminated $100 million in

annual interest expense

•Reduced debt by $1 billion

•Extended and smoothed debt

maturities

•Improved credit metrics

•Reduced idle cash

•Maintained $1 billion liquidity

•Upgraded by rating agencies

•Negotiated new revolving credit

facilities

Maintaining Conservative Balance Sheet

FY 12 Q1

Target

Liquidity

$1.2 billion

$500 million –$1billion

Net debt to TTM

adjusted EBITDA

1.6x

<3x

Net debt to total

capitalization

35%

<40%

Note: Net debt is equal to long-term debt and capital lease obligations, including current portion, less cash and cash equivalents; Net debt to total capitalization is computed

using net debt divided by the sum of net debt and shareholders’ equity; Refer to Non-GAAP measure reconciliations

FY 12 YTD

Repurchased

$111 million of

stock

Repaid $115

million of 2011

and 2014 bonds

Invested $100

million in

pension plans

Uses of Excess Cash

Cash

Reinvest in

packaged

meats

business

repurchases

Extraordinary

pension

contribution

Debt

reduction

Acquire

branded

packaged

meats

companies

Investment Thesis

•Record year over year results for five straight quarters with positive outlook for fiscal

2012

•Improved Pork and Hog Production segment outlook

•Continuing to exhibit strong packaged meats pricing power

•Capitalizing on robust export demand

•Competitive cost structure in all operating segments

•Reduced domestic corn exposure by 40% since fiscal 2008

Delivering quality and consistent earnings growth

•Brands demonstrating strong pipeline for innovation and brand activation

•Growing core brand portfolio through increased consumer marketing

•Resuming evaluation of branded packaged meats acquisition opportunities

Driving profitable top line growth

•Robust financial policies remain a pillar of strategy

•Utilizing excess cash to repurchase shares and reduce debt

Solid financial management