Southfield, MI - Meat processor Thorn Apple Valley Inc. said it expects to be marginally profitable in its fiscal year ending May 1999, after weakness in its now-divested fresh pork business led to heavy losses in fiscal 1998.
"Profitability should be sustainable now that we've shed our volatile fresh pork business," said Joel Dorfman, president and chief executive officer. "Cash flow should also improve, giving us the ability to strengthen our balance sheet by reducing long-term debt."
Thorn Apple said in June that it would exit the fresh meat business and focus instead on higher margin processed meats.
The company posted a fourth-quarter loss of $6.85 a diluted share including one-time items, or a profit of $0.30 a share before charges. That compares with the previous year's loss of $0.28 a share with charges, or a profit of $0.16 a share excluding the one-time items. Quarterly sales fell to $111.5 million from $128.5 million a year ago.
"The failure of Midwest hog herds to rebuild with the rest of the country's, and competitors with superior economies of scale resulting from industry consolidation made Thorn Apple Valley increasingly uncompetitive in fresh pork," Dorfman said. "In fiscal 1998, our fresh pork division added $6.6 million to our net loss and created a disproportionate drain on overall resources, compromising our ability to invest in our processed meats business.'
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