Smithfield earnings show $350M spent on COVID-related costs

Aug. 13, 2020

Smithfield Foods Inc. spent $350 million on COVID-19-related expenses in the second quarter, causing its operating results to swing to a loss.

The company called the first half of 2020 a “tale of two tapes” in its recent earnings report – pre-pandemic and pandemic.

After delivering record results in the first quarter, up 190 percent year-over-year, second-quarter earnings dropped 140 percent to a $72 million loss.

Smithfield incurred both direct and indirect incremental expenses related to COVID-19 totaling $350 million during the second quarter, it said. That included $195 million in people-related costs, including fully compensating more than 22,000 employees to stay home at various points during the pandemic, expanding employee benefits and removing barriers in its health plan, adding “responsibility” pay premiums and hiring private health care providers to offer free, on-site, on-demand COVID-19 testing to all employees.

The company spent $125 million in facility-related costs, including personal protective equipment such as hand-sanitizing stations, mass thermal-scanning systems and physical barriers. A series of “stringent and detailed processes, protocols and protective measures” were adopted, it added. That included slowing lines and decreased efficiency, incurring downtime, changing production to meet shifting demand, and downgrading and rending product.

Smithfield also reported $30 million in community-related costs, including donating 40 million servings of protein to food banks nationwide.

“Going forward, we expect performance to rebound in the fall as our COVID-19 related costs, some of which were one time or short term in nature, are declining,” Ken Sullivan president and CEO, said in a statement.

“Throughout the pandemic, we have had two priorities and two priorities only. First, keep our people healthy and safe. And, second, keep our nation fed. These remain our sole priorities. We thank our Smithfield family for working tirelessly to keep food on America’s tables.”

Smithfield shut down its Sioux Falls pork-processing plant in mid-April as hundreds of employees tested positive for COVID-19 and reopened it in May.

Smithfield resumes operations in Sioux Falls, details plans for scaling up

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Smithfield earnings show $350M spent on COVID-related costs

Smithfield Foods Inc. spent $350 million on COVID-19-related expenses in the second quarter, causing its operating results to swing to a loss.

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