Smithfield Foods says materials costs, Easter date dampen Q1 profit
Packaged meat sales rose 2.2% in the quarter
26 March 2025
2 minute read
By: Smithfield Foods said on Tuesday that cautious consumer spending and higher raw materials costs are limiting profit in its packaged meats business, as the top US pork processor reported its first quarterly results since going public in January, reported Reuters.
The Virginia-based company has focused on selling pork, ham and sausages under brands including Smithfield, Eckrich and Nathan's Famous because its packaged meats business can earn higher margins than a unit that produces hogs.
But increasing materials costs and a later date for the Easter holiday, when many consumers eat ham, are dampening profitability in the first quarter of 2025, Chief Financial Officer Mark Hall told analysts on a call.
Smithfield projected adjusted operating profit for packaged meats at $1.05 billion to $1.15 billion this fiscal year, compared with about $1.1 billion in 2024.
"We are providing a range of estimates that really takes in to account higher input prices and a cautious consumer spending environment," said Steve France, the unit's president.
Smithfield said total sales fell 1.2% to $3.95 billion in the quarter ended Dec. 29, and profit per share was 54 cents, compared with a loss of 25 cents a year earlier.
Shares were down 0.9% at $19.43 at midday.
Packaged meat sales rose 2.2% in the quarter, compared with a year earlier, and accounted for 59% of total sales last year.
Average prices for Smithfield's packaged meats last year rose 3.1%, offsetting a 2.5% decline in sales volumes, Hall said. Bacon sales suffered from laws in California and Massachusetts that ban the sale of pork from pigs kept in tightly confined spaces, he added.
Smithfield's hog production business is benefiting from higher hog prices and lower feed costs, CEO Shane Smith said.
The company has shifted toward buying more of the hogs it processes, rather than owning them while they are being raised, to lessen its exposure to volatile commodity markets. It expects to produce 11.5 million hogs in 2025, down 35% from 2019, and is targeting a drop to 10 million hogs over the medium term, executives said.
Regarding tariff disputes under US President Donald Trump, the company said its fresh pork business is seeing "fairly minimal" disruptions.
