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 […]
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Smithfield Foods warns of cost pressures amid Mideast war, shares fall
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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)