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Moody's: Smithfield pressured
Moody's Investors Service said that following a very difficult cycle in hog production, reduced herd size and rising exports are contributing to higher EBITDA for Smithfield Foods, Inc. although offset somewhat by hedging activities and rising input costs.
Moreover, there is perennial tension between the hog production segment and fresh and packaged meats as increased pricing in hog production negatively impacts the fresh and packaged pork segments' profitability and vice versa, the agency said.
Moody's added that weak demand from the food service sector is also likely to temper growth. Its most recent rating action for Smithfield on Aug. 7, 2009 affirmed the company's long-term ratings, including its B2 corporate family rating; upgraded its speculative-grade liquidity rating to SGL-3 from SGL-4, and maintained a stable outlook.
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