Smithfield, the US food industry giant, will this year invest more than 75m US dollars (62m euros) to retool its Timisoara-based pork processing complex. The US company aims to invest more than 850 million dollars in Romania. “We will reinvest here 100% of the profits derived by our Romanian operations over the next ten years,” said Richard J. M. Poulson, the executive vice-president of the company and senior advisor to the Smithfield Foods Inc. chairman.
So far, investments carried by Smithfield Romania have topped 200 million dollars (165 million euros), including acquisitions and investments earmarked for the renovation and retooling of farms and the Timisoara complex, the construction of new farms and their stocking, as well as for environment protection.
“We are taking further the investments we started in 2004, in order to retool the pork processing complex of Timisoara by the end of this year,” Poulson also said.
By 2010, the company plans to raise and process in Romania more than 4 million pigs annually. The business model proposed by Smithfield includes long-term partnerships with the farmers of Timis, Arad and Bihor counties. Annual payments worth above 55 million dollars are earmarked for the farmers” services. “We will also focus on the modernisation of existent farms and the construction of new farms,” Poulson also said.
The company”s representatives specified investments aimed at Romania are at the core of the company”s policy, as Smithfield wants to turn Romania from a pork importer into a major pork exporter. For the Americans, the growth potential of this market is extremely high. Pork imports cover more than 60% of individual consumption, with only 40% resulting from domestic production and processing. Therefore, the growth potential is still extremely high amid the population”s higher income and the development of the middle class.
According to Smithfield officials, when their operations in Romania reach the maximum potential, total investments will have exceeded 850 million dollars. In line with internal estimations, the US group”s project will create over 4,000 jobs in the region of Banat, by 2010, while Noul Comtim will hit annual sales worth 420 million dollars.
During its almost two years of operations on the Romanian market, Smithfield Foods Inc. sealed two major acquisitions, Agrotorvis and Comtim Grup, and bought 50% stakes both in Agroalim Distribution (one of the largest Romanian logistics companies and food product distributors), and in Frigorifer Tulcea (the biggest frigorific warehouse in the country, with a capacity of 16,000 tonnes). Both companies log annual deals worth more than 30 million euros and were previously owned by Mounir Halawani, a Romanian businessman of Lebanese origin.