Smithfield Foods warns of cost pressures amid Mideast war, shares fall

By Savyata Mishra

April 28 (Reuters) - Smithfield ‌Foods executives ​said rising ​energy-related costs are crimping its packaged meats business amid uncertainty linked to the war in the Middle East, sending its shares ‌down 8% on Tuesday.

The company stuck to its annual sales and ⁠profit forecasts, even as steady demand for packaged meat products such as bacon, ham, sausages ‌and hot dogs helped drive ‌a first-quarter results beat.

“The recent CPI data showed a meaningful move in energy, which ...matters for us because of the large impact on diesel and ​also the resins for packaging, which certainly has a big impact on the packaged meats business," the company's Packaged Meats President Steve France said ⁠on an earnings call.

As a result, the company is planning the business “with an appropriate level of conservatism” ​around packaging and distribution costs, while relying on pricing, mix and productivity measures to protect margins, France said.

Smithfield has relied on ​its broad portfolio, including branded packaged meats ‌and a sizable private-label business, to help it retain budget-conscious shoppers trading down.

Beef costs have also remained elevated due to ⁠tight cattle supplies, prompting companies such as Smithfield Foods to raise prices to protect margins.

Several consumer-facing companies, including Kimberly-Clark, Coca-Cola and Procter & Gamble, are contending with a spike ⁠in input prices due to soaring energy and commodity costs.

Smithfield expects fiscal 2026 sales to ​grow in the low-single-digits range from fiscal year 2025 and adjusted operating profit between $1.33 billion and $1.48 billion.

For the three months ended March 29, Smithfield logged sales of $3.80 billion, beating ‌analysts' average estimates of $3.70 billion, according to data compiled by LSEG.

It earned 64 cents per share on an adjusted basis, ‌above estimates of 59 cents.

The company said it now expects to close its $450 million ⁠deal for Nathan's Famous in ‌the second half of ​2026, compared with the first half expected earlier, citing a partial U.S. government shutdown.

(Reporting by Savyata Mishra in Bengaluru; Editing by ‌Devika Syamnath)

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