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Major reorganisation for Smithfield's pork group

The world's largest pig and pork processor Smithfield Foods has announced a plan to consolidate and streamline the corporate structure and manufacturing operations of its pork group to improve operating efficiencies and increase utilisation.

The American company expects the restructuring plan will result in annual cost savings after applicable restructuring expenses of approximately $55 million in fiscal 2010 and $125 million by fiscal 2011.

The holding company said that the pork group's new business model will enhance the strength of its independent operating company approach, while rationalising manufacturing operations and taking advantage of synergies in key overhead areas such as sales, marketing, purchasing and information technology.

"This plan will create true synergies between our independent operating companies and produce more opportunities to improve the bottom line in the future," said C. Larry Pope, president and chief executive officer. "Combined with the several plant closures we have made over the last three years, this restructuring should improve operating rates dramatically, allowing us to shed low-margin business," he said.

The plan includes actions at several operating units. It will reduce the number of independent operating companies in the pork group to three from seven. Four existing independent operating companies will be combined under the various business units of The Smithfield Packing Company, John Morrell & Co. and Farmland Foods.

This means that Farmland Foods, Patrick Cudahy, Carando Foods and Cumberland Gap Provision & Co. will be combined in these three business units.

International sales
The international sales organisations that are responsible for exports of several independent operating companies will be consolidated into one group to form Smithfield Foods International Group, providing one face to overseas markets and reducing selling, general and administrative expense. This consolidation already is underway and has yielded positive results.

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Smithfield Foods

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