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On Thursday, Smithfield Foods, Inc. (NYSE:SFD) reported its fourth quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Farha Aslam – Stephens Incorporated: Just a little more color on the hog production group in the first quarter. You’re now about half way done. I believe, you would had some hog as well as green, could you just provide more color on what you expect that EBIT per head for that first quarter, as well as for the – again could you remind me what you’re expecting for the full year for 2013, and what needs to happen for you to get to your target level?
C. Larry Pope – President and CEO: I think that Bo will give you more color, Farha. I’ll tell you that I think we’re expecting our returns in the first quarter to be inside that normalize range. Bo, even give the weakness in the first part of the quarter, is that right?
Robert W. Manly, IV – EVP and CFO: That’s right. Farha, I think probably the one of the disappointing things that I pointed out in my discussion was the lack of appreciation cutout value and live prices that typically we see in the spring, I think that got postponed. We came into our May period, and frankly, as I think, your question points out we had losses in hog production at the front end of this quarter. They have turned to positive over the past week and are well in the normalize range today. We think that there is upward potential as we move to the back half of this quarter for further appreciation in cutout. Obviously, we are looking for decreases in our hog product cost, which would match up with the future strip to indicate frankly. We are just a few dollars away from being able to look at normalized margins on a hedgeable basis for the balance of the year. So, we see further appreciation in both cut out and live prices over the short-term and that should give us some opportunities to take the risk of the table, particularly for this fall as far as the hog markets are concerned.
Christina McGlone – Deutsche Bank North America: My question is that it seems like we had gone to a period that we are in this kind of sweet spot in the pork complex where you saw basically prices high enough for everyone in the chain to make money and now it seems that we are flip-flopping between hog production group and fresh pork margins. So, as the outlook for hog production group strengthens in the near-term, it seems that fresh pork margins are deteriorating, and then if we look to the fall, fresh pork margins will get better, but then I think hog production margins could deteriorate on a spot basis. So I’m curious, what changed where both before could perform well and be profitable and now it seems like a flip-flop situation?
C. Larry Pope – President and CEO: Well, Christina, I’ll take one part and Bo can answer his own. I mean what you just outlined was what is called the seasonality of the hog business when traditionally the hog production side of the business does better than the meat processing side in the summer and then fall apart when you get to fall hog run. The hog prices come down a bit and the fresh cut out is usually pretty good. So that’s just the seasonality of the business. So, I think the whole complex has come down a bit as these – as we got more pork supplies coming to the market, and so that’s before. I think the last two years we’ve had a little bit of a shortage in supply. We’ve got some of that filled back up at this point, but I don’t want to overplay this thing because I think we’re taking a three month situation, and extrapolating that into future events. We did have some what we believe was some accelerated pull forward on hogs in the spring, and we – Bo and I talked about a hold we thought it was coming, and we saw a little bit of that in May. We’re seeing a fairly sizable hold right now. The hog market is jumping up dramatically right now, and plants are running short, because they simply can’t get the hogs even at $70. I think, the hog market printed $71 last night, so – and the cut outs of $89, so I mean, the meats responded as well. So, I think, I’m not predicting the future, because there is volatility in this whole pork complex, but I’m simply saying it’s why the ship is riding itself as we speak right now what we thought would have (indiscernible) earlier than that.
Robert W. Manly, IV – EVP and CFO: I think, Christina, what you described in terms of the balance of the movement between hog production and fresh pork margins is one of the – the basis of the integrated model that typically that will happen in a short term relationship, but I guess your overall question is what has changed, and what allows the chain to make money at all parts of the system. I think, you find when you have increases in demand, whether that’s domestic or international that that’s the opportunity when the whole chain is able to make margin across the entire system, because you’ve increased that spread between the price of meat and the price of corn. So, those are the time periods when you see incremental improvements in demand. Otherwise, I think, you’re going to see as we had hog – take hogs out of the industry or the worldwide supplies, and as changes take place in slaughter capacity, you’ll probably see some margin moving back and forth between hog production and the packing plant, that’s one of the reasons why we’re building such a strong packaged meats base is that that base will then give us the ability to weather any of the short term volatility you may see between those two segments. But overall I think the best thing we’ve seen is the export growth really giving us another channel another trade channel with which to spread out overall pork supply. So all that’s very positive and I think you are seeing a normal reaction as we’ve added a few more hogs in the system in terms of bringing some pressure into the hog production and fresh meat complex. But I think as Larry points out there are signs that overall demand is improving both on international basis as well as domestic.
C. Larry Pope – President and CEO: Christine I want to make one final point. One of the things that went out of whack here for the spring period was the spread between wholesale pricing and retail pricing. So even as we priced the product through, we didn’t see the retail reaction of that because the retailers widened their margin. So you didn’t see the supply demand impact that you would routinely see. Now that spread has fallen to more normalized level and so the meat has moved up for a nice and same seem to be moving back a little bit more towards the year.
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