SmithField Foods’ Credit Addiction
Larry Pope, chief executive of Smithfield Foods, assured investors at the Barclays Capital “Back-to-School” Consumer Conference that steps taken by the world’s largest hog and pork producer have reduced its risk of violating debt covenants. Can the company, which has a historic appetite for binge buying, actually stop its credit addiction and transform itself into a profitable, packaged-meats purveyor? Ignoring the fact that it operates in a cyclical industry — fluctuations in demand and commodity prices (livestock — primarily hogs — and grains and fuel) have historically affected its results — the company pushed a growth through acquisition strategy for the last 20 years. The company has now shifted its overall focus from acquisitions and capital spending to integration of…
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