Smithfield Foods NASDAQ: SFD reported third-quarter adjusted operating profit of $145 million, down from $310 million a year earlier, as weak domestic demand, global pork oversupply and constrained export opportunities pressured its Fresh Pork and Hog Production businesses. The company said its Packaged Meats segment remained resilient, delivering higher volume, profit and margins despite a cautious consumer environment.
Third-quarter sales totaled $3.4 billion, down 8.3% from the prior-year period. Adjusted net income fell to $103 million from $230 million, while adjusted diluted earnings per share declined to $0.26 from $0.58.
“The decrease in the year-over-year performance was driven by a sharp decline in the pork value chain due to softer domestic demand and a global oversupply of pork,” President and CEO Shane Smith said. He cited persistent inflation, high gasoline prices and reduced SNAP benefits as factors affecting U.S. consumption, while higher pork supplies in Mexico and China and ongoing tariffs weakened export conditions.
Packaged Meats Expands Profitability
Packaged Meats sales declined 5.2% to $2 billion, as a 5.3% decrease in average selling prices more than offset 0.2% volume growth. Operating profit increased $4 million to $230 million, and segment margin expanded 80 basis points to 11.6%.
Chief Financial Officer Mark Hall said the segment benefited from disciplined pricing, lower raw material costs, volume growth and favorable mix, which more than offset inflationary inputs and higher marketing spending. The segment produced its second-highest third-quarter operating profit on record, according to the company.
Smithfield said it grew volume by nearly 1% across its top 25 categories while industry volume declined 3.3%. The company reported volume-share gains in its five largest categories, including smoked ham, uncooked bacon, packaged lunch meat, hot dogs and cooked dinner sausage.
President of Packaged Meats Steve France said consumers remain selective and value-conscious rather than abandoning purchases altogether. He said Smithfield’s portfolio of premium, value and private-label offerings provides flexibility across price points.
The company also cited growth in e-commerce, where its volume rose 22.5% during the quarter compared with 13.4% industry growth. Prime Fresh packaged lunch meat volume increased 17.9%, while Smithfield continued to introduce flavored bacon, bratwurst and holiday ham products.
Upstream Segments Face Pork-Market Pressure
Fresh Pork sales fell 17% to $1.8 billion, reflecting an 11.4% drop in average selling price and a 6.3% decline in volume. The segment posted an operating loss of $89 million, compared with operating profit of $10 million in the third quarter of 2025.
Hall said the industry processing spread narrowed approximately 28% sequentially and was about 35% below the prior year, a level he said was insufficient to cover processing costs. More competitive export conditions in Mexico and Asia also hurt volumes and margins.
Hog Production sales decreased 15% to $691 million, primarily due to $74 million in lower sales to joint-venture partners and lower realized hog prices. Operating profit fell to $34 million from $89 million a year earlier.
Smith said the company has entered a new long-term supply agreement with an existing joint-venture partner that will reduce internally produced hogs by roughly 900,000 annually. He said the action advances Smithfield’s strategy of reducing capital and earnings exposure to commodity volatility while maintaining supply assurance.
During the question-and-answer session, Smith said Fresh Pork volume declines reflected business optimization rather than abnormal disease issues. Donovan Owens, president of North America Pork, said the company needs to see how ham and belly values perform during the holiday period before assessing conditions for spring 2027, though he expects Fresh Pork to see some benefit late in the fourth quarter.
Nathan’s Acquisition and Capital Plans
Smithfield completed its acquisition of Nathan’s Famous during the quarter. The company said the deal secures its rights to the brand in perpetuity, expands its Packaged Meats portfolio and is immediately accretive to adjusted earnings per share.
Hall said Nathan’s had about $33 million in annual license costs that Smithfield will effectively retain following the acquisition. France said the company sees opportunities to accelerate innovation at retail and expand the brand’s foodservice business through Smithfield’s direct sales organization.
The company ended the quarter with net debt to adjusted EBITDA of 0.5 times and liquidity of $3.5 billion, including $1.2 billion in cash and cash equivalents. Trailing 12-month operating cash flow was $1.3 billion.
Smithfield expects 2026 capital expenditures of $350 million to $375 million, excluding spending on its proposed Sioux Falls facility. The company said it plans to reapply for a conditional-use permit after a court decision reversed a prior permit, and it will provide an updated construction timetable when approvals are clearer.
2026 Outlook Reset
Smithfield lowered its full-year sales outlook to a low-single-digit decline from a prior expectation for roughly flat sales, primarily reflecting lower pork complex values. It now expects total company adjusted operating profit of $900 million to $1 billion.
- Hog Production: full-year range from a $25 million loss to a $25 million profit.
- Fresh Pork: full-year range from a $50 million loss to breakeven.
- Packaged Meats: operating profit of $1.09 billion to $1.14 billion.
The company continues to anticipate annual dividends of $1.25 per share in fiscal 2026. Smith said the updated outlook does not alter Smithfield’s long-term strategy of investing in brands, optimizing its upstream operations, pursuing disciplined acquisitions and maintaining a strong balance sheet.
About Smithfield Foods (NASDAQ:SFD)
Smithfield Foods, Inc is a food company engaged in pork production and the manufacture and sale of packaged meats. Its operations include hog production, fresh pork processing, and the preparation of bacon, ham, sausage, hot dogs, deli meats and other ready-to-cook or ready-to-eat products.
The company sells products under brands that include Smithfield, Eckrich, Nathan's Famous and Farmland, as well as through private-label and foodservice channels. Its products are distributed through grocery retailers, restaurants, foodservice operators and other commercial customers in the United States and international markets.
Founded in Smithfield, Virginia, in 1936, Smithfield Foods expanded through acquisitions and became one of the world's largest pork processors and hog producers.
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