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REVITALIZING OUR GLOBAL COMPETITIVENESS
The stark realization we faced in 2006 was that our long-standing vision of producing "fresh pork for the world" was no
longer viable. Our protein business model had to change. In the spring of 2006, we set out to determine the best path to
manage the impact of currency and recover our lost cost competitiveness. The result, announced in October 2006, was a
dramatic shift in strategy and the implementation of
a new business model in our protein value chain operations. We will focus on what we can both control and do best – build
on our formidable strengths in further processed, branded, value-added meats and meals. As a result, all parts of our
protein value chain operations – animal feed, hog production and primary processing – are being scaled to support our
core value-added protein business. This change in direction reduces our size in these businesses, and in doing so, is
expected to lower our overall exposure to currency and commodity swings. We will focus our resources on markets with
higher growth and margins, with a greater emphasis on innovation, brands and consumer focus.
The consequences of this new direction are as follows:
First, we will simplify our organizational structure by integrating the six loosely connected operating companies in
our protein value chain into one, vertically integrated, protein organization.
Second, we will focus growth in the value-added fresh and further processed meats and meals businesses, with meal
solutions a significant component of this vision. We will sell or exit businesses not aligned to this new business model.
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