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    SFD
    Earnings call· Mar 2026(Q1 FY26)

    SMITHFIELD FOODS Q1 FY26 earnings call SFD

    Apr 28, 2026 Source

    Executive summary

    Smithfield Foods Q1 FY26 — Record Adjusted Operating Profit Driven by Packaged Meats

    Smithfield Foods delivered record Q1 FY26 adjusted operating profit, primarily driven by strong performance in its Packaged Meats segment and disciplined execution of its vertically integrated model. The company successfully navigated a challenging external environment marked by consumer caution and geopolitical volatility, leveraging strategic pricing, productivity initiatives, and a robust portfolio of branded and private label offerings. Management remains confident in its full-year outlook, emphasizing operational discipline and cost management to protect margins and deliver profit growth.

    Highlights

    5

    • Record first quarter adjusted operating profit of $339 million, up 4% year-over-year.

    • Adjusted operating profit margin expanded by 30 basis points to 8.9%.

    • Packaged Meats operating profit of $275 million, up 4% year-over-year, with 3.5% volume growth.

    • Branded volume share increased by 16% across 25 categories, gaining 0.4 points of share.

    • Liquidity of $3.7 billion and net debt to adjusted EBITDA ratio of 0.4x.

    Concerns

    4

    • Packaged Meats operating profit margin down modestly due to earlier Easter, higher raw material input costs, and continued consumer caution.

    • Fresh Pork operating profit down slightly to $78 million from $82 million year-over-year, impacted by lower production volume and China export volumes.

    • Middle East conflict adding macro volatility, leading to higher freight, packaging, and agricultural input costs.

    • Bioscience operations reported softer sales and related losses, contributing to a $3 million decline in the "Other" segment's operating profit.

    Guidance & targets

    4
    CategoryTargetConfidence
    Packaged Meats Operating Profit
    $1.1 billion to $1.2 billion
    high materiality
    High
    Annual Dividend Per Share
    $1.25
    medium materiality
    High
    Internal Hog Production for Fresh Pork Needs
    approximately 30%
    medium materiality
    Medium
    Capital Investments for Growth
    More than 50%
    low materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Packaged Meats
    Operating profit up 4% year-over-year. Margin down modestly due to earlier Easter, higher raw material input costs, and consumer caution.
    Operating profit: $275 millionVolume growth: 3.5%Volume growth (ex-Easter): 1.3%Average sales price increase: 2.6%
    		$2.1 billion6%—12.8%
    Fresh Pork
    Operating profit down slightly from $82 million and 4% margin in Q1 FY25. Impacted by lower production volume due to winter storms and lower China export volumes, partially offset by value-added sales.
    Operating profit: $78 millionVolume down: 2.6%Average sales price increase: 1.5%Retail channel sales growth: 3%Value-added case-ready and marinated items sales increase: 6%Food service channel sales growth: 27%
    		$2 billion-1%—3.9%
    Hog Production
    Profit up from $1 million in Q1 FY25, driven by improved commodity dynamics (higher selling prices, lower feed costs) and operating efficiency. Sales decrease primarily due to one-time initial sale of inventory to JVs last year.
    Hogs marketed decrease: 4% or 125,000 headAverage selling price for hogs increased: 1%
    		$769 million-17%—$4 million
    Other (Mexico and Bioscience)
    Operating profit down due to softer sales and related losses in bioscience, partially offset by increases in Mexico.
    		———down $3 million

    Operational metrics

    30
    Consolidated Sales
    $3.8 billionup 1% YoY
    Q1 FY26

    Primarily driven by higher packaged meats and Mexico sales, offsetting $155 million headwind from nonrecurring hog production sales to JVs.

    Adjusted Operating Profit
    $339 millionup 4% YoY
    Q1 FY26

    Record Q1 adjusted operating profit.

    Adjusted Operating Profit Margin
    8.9%up 30 bps YoY
    Q1 FY26

    Expanded from 8.6% last year.

    Adjusted Net Income
    $251 millionup 11% YoY
    Q1 FY26

    Record Q1 adjusted net income.

    Adjusted Diluted EPS
    $0.64up 10% YoY
    Q1 FY26

    Compared to $0.58 per share in Q1 FY25.

    Corporate Expenses
    down $3 milliondown 11% YoY
    Q1 FY26

    Reflecting ongoing continuous improvement efforts.

    Net Debt to Adjusted EBITDA Ratio
    0.4x
    Q1 FY26

    Well below policy of less than 2x.

    Liquidity
    $3.7 billion
    Q1 FY26

    Well above policy threshold of $1 billion.

    Cash Flow
    exceeded $1.1 billion
    TTM

    Strong cash flow generation.

    Capital Expenditures
    $88 millioncompared to $79 million in Q1 FY25
    Q1 FY26

    Over 50% of planned investments for growth projects.

    Branded Business Volume Growth
    1.6%vs. industry down 0.2%
    Q1 FY26

    Demand has been steady, driven by consumer choice for quality.

    Private Label Business Volume Growth
    over 5%
    Q1 FY26

    Remains very healthy, provides key competitive advantage.

    Cooked Dinner Sausage Unit Growth
    9%
    Q1 FY26

    Example of growth in higher-margin focus areas.

    Dry Sausage Unit Growth
    10%
    Q1 FY26

    Example of growth in higher-margin focus areas.

    Branded Volume Share Growth
    0.4 points
    Q1 FY26

    Across 25 key packaged meat subcategories.

    Points of Distribution
    5.5%vs last year
    Q1 FY26

    Key contributor to growth.

    Packaged Lunchmeat Volume Growth
    11.1%vs. industry down 6.5%
    Q1 FY26

    Top-performing category.

    Smithfield Prime Fresh Volume Growth
    26%
    Q1 FY26

    One of the most important Packaged lunchmeat brands.

    Advertising & Promotion Spend
    23%YoY
    Q1 FY26

    Targeted and ROI-driven investment to support value-added strategy and long-term share.

    Armour Dry Sausage Volume Growth (innovation)
    12%YoY
    Q1 FY26

    Driven by product innovation.

    Curl's Refrigerated Barbecue Meats Volume Growth (innovation)
    more than 22%
    Q1 FY26

    Supported by new snacking formats and globally inspired flavors.

    Food Service Channel Sales Growth
    4%
    Q1 FY26

    Food service represents roughly 30% of packaged meats sales.

    Fresh Pork Retail Channel Sales Growth
    3%
    Q1 FY26

    Part of strategy to increase fresh pork operating profit.

    Fresh Pork Value-Added Case-Ready & Marinated Sales Increase
    6%
    Q1 FY26

    Emphasizing higher-margin offerings.

    Fresh Pork Food Service Channel Sales Growth
    27%
    Q1 FY26

    Reflects increased sales of value-added categories and strong sales of ribs.

    Marinated Pork Volume Growth
    3.2%vs. industry down 3.8%
    Q1 FY26

    Smithfield's marinated pork volume outperformed the industry.

    Case Ready Pork Volume Growth
    high single digitsYoY
    Q1 FY26

    Part of growing value-added footprint.

    Miles Driven Reduction
    1 million milesvs FY24
    FY25

    Part of transportation network optimization.

    Miles Driven Reduction
    another 1 million milesvs FY25
    FY26

    Planned reduction with line of sight.

    Raw Material Costs (Packaged Meats)
    higher by $94 millionvs last year
    Q1 FY26

    Significant increase, especially in beef and turkey categories.

    Industry KPIs

    6
    MetricValueDetails
    Brand platform growth1.6%%
    Adjusted EPS operating income$0.64USD
    Retailer trade negotiation statusmultiyear strategic partnerships
    Volume mix vs pricing decompositionVolume growth of 3.5%, Average sales price increase of 2.6%%
    Elasticity consumer response commentarycautious
    Category growth benchmark channel shift dataindustry down 0.2%%

    Product announcements

    2
    ProductTypeDetails
    Smithfield Premium Pork Loin Lineuplaunch
    Smithfield Meal Ready Cuts Platformlaunch

    Deals & partnerships

    1
    Nathan's FamousAcquisition of a top national packaged meats brand.long term

    Agreement entered in January. Timeline to close extended due to impact of partial government shutdown on CFIUS review process.

    Capital programs

    2
    Sioux Falls Processing Plantawaiting final approvals

    Benefit: most modern, efficient and largest combined Fresh Pork and Packaged Meat processing plant in our network

    Will be the largest combined Fresh Pork and Packaged Meat processing plant in the network. Awaiting final approvals before sharing more information.

    Dry Sausage Production Network Optimizationunderway

    Benefit: increased efficiency, improved yields

    Moving dry sausage production from smaller and older East Coast plants to technologically advanced and efficient facilities such as Nashville.

    Risks & headwinds

    8
    Geopolitical volatility from Middle East conflictongoing

    flows through higher freight packaging and agricultural input cost

    Mitigation: Pricing and mix disciplined spending, productivity initiatives, hedging and contract and procurement actions.

    Cautious U.S. consumer and pressured spending environmentongoing

    Packaged meat segment operating profit margin down modestly

    Mitigation: Delivering value-added protein solutions without compromising quality; portfolio of trusted brands provides affordable protein solutions; portfolio strategy allows us to retain consumers within our brands as they trade up and down the value spectrum.

    Higher raw material input costsQ1 FY26, expected to continue

    Q1 raw material costs were higher than last year by $94 million, most notably for pitch meats in beef and Turkey

    Mitigation: Disciplined pricing across portfolio, hedging and contract and procurement actions, partnering with certain suppliers.

    Supply chain cost pressures (freight, packaging)near-term

    diesel volatility really pressuring transportation costs and lagging effect in terms of resin-based packaging

    Mitigation: Transportation network optimization (reducing miles driven), lane consolidation, intermodal, hedging opportunities for diesel, value engineering processes for packaging.

    Lower Fresh Pork production volumeQ1 FY26

    offset by lower production volume due to a temporary winter storm disruptions in our East Coast operations

    Mitigation: Next best sales strategy, including more higher-margin value-added sales in the U.S. retail channel.

    Lower China export volumesQ1 FY26

    lower gross margins driven by lower China export volumes year-over-year

    Mitigation: Next best sales strategy, including more higher-margin value-added sales in the U.S. retail channel.

    Softer sales and related losses in Bioscience operationsQ1 FY26

    down $3 million versus the prior year (for Other segment)

    Higher disease incidence (PERS, PDP) in the hog industrycurrent

    reports showed a higher incident rate of both PERS and PDP

    Mitigation: Improved operating efficiency on retained farms, alternative ingredients, by-products, optimized grain procurement.

    What to watch in Q2 FY26

    5

    Packaged Meats Operating Profit Margin

    next quarter
    Current12.8% (Q1 FY26)
    TargetRecovery towards prior year levels, or stability despite cost pressures

    Why it matters

    Management noted Q1 margin was down modestly due to higher raw material costs and consumer caution, and Q2 is expected to be similar to Q1. Verification of mitigation strategies will be key.

    Packaged meat segment operating profit margin of 12.8%, which was down modestly from last year driven primarily by the earlier Easter increase in the mix of holiday hams higher raw material input cost and continued consumer caution in the quarter.

    Q&A highlights

    7

    Seeking color on expected quarterly performance, especially given Q1 strength and reiterated full-year guidance.

    Management expects solid Q2 results, with Packaged Meats broadly similar to Q1 but facing tougher YoY comparisons due to Easter timing and higher input inflation (beef, turkey, freight, packaging). Fresh Pork is seasonally softer in Q2/Q3 but expected to be modestly up YoY due to domestic value-added strength. Hog Production is seasonally strongest in Q2/Q3, driven by favorable market fundamentals.

    “But looking specifically at the second quarter, the macro environment and the consumer remain pressured, but we expect to deliver solid second quarter results.”

    asked by Peter Galbo · answered by Shane Smith

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 Performance Highlights

    Smithfield Foods reported a strong Q1 FY26, achieving record adjusted operating profit of $339 million, a 4% increase year-over-year, with an adjusted operating profit margin of 8.9%. This performance was largely driven by the Packaged Meats segment, which saw operating profit rise 4% to $275 million on 6% sales growth and 3.5% volume growth, benefiting from the earlier Easter holiday and disciplined pricing.

    02

    Strategic Focus on Packaged Meats

    The company is actively pursuing growth in packaged meats through product mix improvements, focusing on higher-margin value-added categories like cooked dinner sausage (up 9% in volume, 0.8 pts unit share gain) and dry sausage (up 10% in volume, 1.1 pts unit share gain). Increased distribution (up 5.5% YoY) and targeted brand investment, including a 23% increase in A&P spend in Q1, are key drivers for expanding market share across its 25 key subcategories.

    03

    Fresh Pork Profitability & Value-Added Offerings

    Smithfield is enhancing fresh pork profitability by maximizing net realizable value and improving operating efficiencies. Sales in the retail channel grew 3%, with value-added case-ready and marinated items increasing 6%. New product innovations, such as Smithfield Half Longes and meal-ready cuts, are driving mix and margin improvements by catering to strong demand for convenient, nutritious protein options.

    04

    Hog Production Optimization

    The company continues to optimize its hog production, achieving improved operating efficiency on retained farms and delivering $4 million in profit for Q1 FY26, up from $1 million a year ago. This progress, coupled with favorable hog and feed markets, supports the long-term goal of producing approximately 30% of fresh pork needs internally for supply assurance and cost management.

    05

    Cost Management & Vertical Integration

    Smithfield emphasizes a culture of continuous improvement, expecting efficiency savings to contribute to enhanced profitability in FY26. The vertically integrated model provides consistency in cash flows and earnings, allowing the company to manage profit migration across segments and mitigate volatile input costs through pricing, hedging, and procurement actions.

    06

    M&A and Strategic Growth

    The planned acquisition of Nathan's Famous, now expected to close in H2 2026 due to regulatory review, is a key strategic move to secure brand rights and maximize growth. Smithfield remains disciplined in evaluating complementary M&A opportunities to bolster organic growth and leverage its strong balance sheet and liquidity position.

    AI-generated summary of the company’s earnings call. Not investment advice.