International segment operating profit more than doubled to $108.2 million primarily on strong profitability in Romania, as well as the company's Polish hog production operations. Recessionary pressures and higher raw material costs continued to weigh on Campofrio's margins.
The company will continue to execute its strategic growth plan to improve its earnings stream and migrate Smithfield further towards a consumer packaged meats company. The fundamental tenets of this plan – as outlined last quarter – include the following:
- Increase capital investment to improve competitive cost structure and achieve least cost and best in class operations,
- Continue a higher level of investment in direct-to-consumer marketing programs to build brand equity and grow sales,
- Establish a culture of innovation to build strong product pipeline to drive packaged meats volume and margin,
- Emphasize hog production assets as strategic point of difference, and
- Pursue a diversified mergers and acquisitions strategy in packaged meats and value-added products.
"We believe in this plan's ability to deliver broad-based gains in volume, market share and distribution across our core brands and key product categories. The combination of those gains, an improving product mix toward differentiated, branded and value-added products, as well as loosening export market restrictions in our fresh pork business and higher contributions from our international meat processing business, should provide significant long-term growth potential for Smithfield," said Mr. Pope.
Smithfield and Shuanghui Merger
As previously announced on May 29, 2013, Smithfield and Shuanghui International Holdings Limited ("Shuanghui") entered into a definitive merger agreement that values Smithfield at approximately US$7.1 billion, including the assumption of Smithfield's net debt. Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Shuanghui will acquire all of the outstanding shares of Smithfield for US$34.00 per share in cash.