Smithfield Foods, Inc.

What they do

Smithfield processes live hogs into fresh pork and further processes fresh meat into packaged meats such as bacon, sausage, hot dogs, deli meats and ham under brands including Smithfield, Eckrich and Nathan's Famous. Operations run through three reportable segments - Packaged Meats, Fresh Pork and Hog Production - plus Mexico and Bioscience, which are aggregated as 'Other.' Its hog production and fresh pork operations feed its packaged meats business internally, with about 80% of Packaged Meats raw materials sourced from Fresh Pork and roughly 40% of Fresh Pork raw materials coming from Hog Production.

Revenue drivers

• Packaged Meats — U.S. processing of fresh meat into branded and private label packaged products sold mainly to retail and foodservice; reported sales of $2.023 billion in the quarter ended June 28, 2026, and segment operating profit of $265 million.
• Fresh Pork — U.S. processing of live hogs into primal, sub-primal and offal products sold to retail, foodservice and industrial customers and export markets including China, Mexico, Japan, South Korea and Canada; about one-third of output, including most hams, bellies and trimmings, is transferred internally to Packaged Meats.
• Hog Production — U.S. hog raising on company-owned and contract farms, with nearly all hogs processed by Fresh Pork, plus external sales of livestock feed and grains and transportation services.
• Other (Mexico and Bioscience) — Mexico holds a 66% interest in Granjas Carroll de Mexico (Altosano), raising hogs and producing fresh pork for Mexican customers; Bioscience uses hog raw materials to make heparin products, including an active pharmaceutical ingredient, sold to the healthcare industry.

Recent performance

For the second quarter of fiscal 2026 ended June 28, 2026, net sales were $3.7 billion, down 2.3% year over year, which the company attributed primarily to non-recurring sales to Hog Production joint ventures in the prior-year quarter and the earlier Easter holiday. Operating profit was $290 million, up 11.6%, with a 7.8% operating margin, while adjusted operating profit was $300 million and adjusted net income was $245 million. Packaged Meats operating profit was $265 million at a 13.1% margin, down from $301 million and 14.5% in the prior-year quarter. First-half fiscal 2026 net sales were $7.5 billion, down 0.8%, with record first-half operating profit of $623 million and net income of $484 million, up 17.6%. Net cash flows from operating activities were $204 million in the first half of 2026, up $96 million from the first half of 2025.

Strategy

Management is focused on driving profitable growth in Packaged Meats through brand awareness, product and packaging innovation, and expanded distribution, while shifting the portfolio toward value-added and margin-accretive products. In Fresh Pork, the company seeks to maximize the value of each hog, leverage retail, foodservice, industrial and export channels, and pursue whole-hog utilization. Smithfield also continues to optimize the size of its hog production operations and to mitigate input costs through productivity improvements, procurement strategies and commodity hedging. On February 16, 2026, the company announced it had initiated approval to build a new combined fresh pork and packaged meats facility in Sioux Falls, South Dakota, estimated at up to $1.3 billion over three years and intended to replace its existing 117-year-old plant, subject to board, permitting and regulatory approvals.

Risks

• Commodity price cyclicality — Results are cyclical and can be hurt by fluctuations in prices for meat, hogs and feed ingredients, which are the largest components of cost of goods sold.
• Supply chain disruption — Disruption of the supply chain, including at production, distribution or cold storage facilities, could adversely affect the business and results of operations.
• Competitive food industry — The food industry is highly competitive, and failure to compete successfully could adversely affect business, financial condition and results.
• Consumer preferences and brand perception — Changes in consumer preferences or failure to maintain favorable perception of brands and products could negatively impact the business.

Outlook

The company updated its fiscal 2026 outlook to reflect the external macro environment while stating these factors do not change its strategic priorities. Management said its updated outlook reflects ongoing macroeconomic pressures and emphasized a strong balance sheet, substantial liquidity and a clear action plan. In its second-quarter fiscal 2026 release, Smithfield pointed to record first-half operating and adjusted operating profit, continued market share gains in key branded categories and strong operating cash flow generation.