Smithfield Foods tops quarterly estimates, flags Middle East-related cost pressures
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A sculpture adorns Smithfield Foods' hog slaughterhouse in Smithfield, Virginia, U.S. October 17, 2019. REUTERS/Tom Polansek
March 24 (Reuters) - Smithfield Foods on Tuesday beat analysts' estimates for the fourth-quarter results, driven by strong demand, and said it expects the Middle East conflict to raise its fuel, corn and packaging costs.
Shares of the U.S. pork processor jumped 5% in morning trading after the company also issued an upbeat annual sales and profit forecast.
"While we expect input costs to remain elevated by historical standards, they should be slightly lower than in 2025," CFO Mark Hall said.
The company has raised prices to offset rising raw material costs, and has also benefited from increased demand for its products as consumers opt to cook at home more amid tighter budgets.
Smithfield expects total annual sales to be up by low-single-digits, compared with analysts' estimates of 1.26% growth. It also expects annual adjusted operating profit between $1.33 billion and $1.48 billion, compared with profit of $1.34 billion recorded in fiscal year 2025.
Executives said the outlook accounts for several risks, including the Middle East conflict, which could push up costs of fuel and petroleum-based materials such as packaging, besides raising corn prices as they also track oil markets. However, they cautioned that the full impact is yet to be determined.
The company's sales rose 7% to $4.23 billion during the quarter, compared with analysts' expectations of $4.14 billion, according to data compiled by LSEG, reflecting higher market prices.
Packaged meat sales rose 4.3% in the quarter ended December 28 from a year earlier. It is a major revenue-generating segment for Smithfield. Fresh pork sales increased 2.1%.
The Virginia-based company said it expects protein to remain in high demand this year and for pork to be "well positioned as a healthy, affordable option for consumers."
The company posted quarterly adjusted profit from continuing operations of 83 cents per share, compared with analysts' expectations of 68 cents per share.
(Reporting by Koyena Das in Bengaluru; Editing by Sriraj Kalluvila, Leroy Leo and Jonathan Ananda)
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