Smithfield Foods, one of the United States' largest meat products producers, issued a press release Tuesday that detailed the financial impact the company took from various safety measures to combat COVID-19 during the April-June quarter.
The Smithfield, VA-based company said it spent $350 million on pandemic safety measures during the second quarter, causing its adjusting operating profit to swing to a loss.
The company actually broke down how that $350 million was spent:
- $195 million went toward directly protecting its employees
- Fully compensating 22,000 employees to stay home at various points of the pandemic
- Expanding employee benefits and removing all health plan barriers
- Adding "responsibility" pay premiums
- Hiring private healthcare providers to supply free, on-site, on-demand COVID-19 testing to all employees
- Facility-related costs totaled $125 millions
- Adding PPE and hand sanitation stations, installing mass thermal scanning systems and physical barriers, among other protective measures
- Adopting stringent and detailed processes, protocols and protective measures that follow or exceed federal guidelines for meat and poultry processing workers and employers
- Slowing production lines and decreasing efficiency, incurring downtime and changing production to meet shifting demand and downgrading and rendering product
- Community-related costs totaled $30 million from donating 40 million servings of protein to food banks nationwide.
In total, Smithfield said it had an adjusted operating loss of $72 million during Q2, compared to a $180 profit a year earlier. The company noted that with pre-pandemic risk management activities factored in, the company had a Q2 operating profit of $102 million, down 54 percent, or $221 million, from a year earlier.
The pork, beef and poultry producer went on to say that the first six months of 2020 was "a tale of two tapes" regarding pre-pandemic and pandemic months. Smithfield said that prior to the pandemic's onset in the US, the company had record Q1 results, with operating results soaring 190 percent year-over-year. But the company was hammered by COVID-19 in Q2, sending adjusted operating results to plunge 140 percent year-over-year.
"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," said Kenneth Sullivan, Smithfield president and CEO.
According to data collected by the non-profit Food and Environment Reporting Network, at least 189 meatpacking plant workers have died as of Aug. 12, while at least 40,517 meatpacking workers have tested positive for COVID-19. FERN said at least 471 meatpacking plants have had confirmed cases of the virus.
