By Tom Polansek and Savyata Mishra (Reuters) -Smithfield Foods, the biggest U.S. pork processor, said on Tuesday that its quarterly revenue and profits jumped as sales prices climbed. The meatpacker, a majority-owned subsidiary of Hong Kong-based WH Group, raised the midpoint of its annual profit forecast range, sending shares up 6%. “It’s really all about […]
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Smithfield Foods says higher pork prices boost sales
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By Tom Polansek and Savyata Mishra
(Reuters) -Smithfield Foods, the biggest U.S. pork processor, said on Tuesday that its quarterly revenue and profits jumped as sales prices climbed.
The meatpacker, a majority-owned subsidiary of Hong Kong-based WH Group, raised the midpoint of its annual profit forecast range, sending shares up 6%.
“It’s really all about consumer behavior and what’s going to happen as they remain under pressure,” CEO Shane Smith told Reuters. “I think we have the right strategies in place.”
Prices increased for Smithfield’s packaged meats and fresh pork at a time when inflation has left consumers cautious about spending. Smithfield executives expect prices to remain elevated as shoppers demand protein and beef is expensive.
QUARTERLY SALES RISE 12.4%
Smithfield reported total sales rose 12.4% to $3.75 billion in the quarter that ended September 28, compared with a year earlier.
Average sales prices for its packaged meats climbed 9.2%, while its fresh pork prices jumped 12% due to lower U.S. production and strong demand, it said.
The meatpacker raised its outlook for annual adjusted operating profit to a range of $1.23 billion to $1.33 billion from $1.15 billion to $1.35 billion. That includes potential impacts of delayed food aid benefits during the federal government’s shutdown, Smithfield said.
“We’re very poised to see elevated pork markets, especially when you look at how the protein sector is sitting right now with beef being so high,” Donovan Owens, president of Smithfield’s fresh pork business, said on a conference call.
U.S. President Donald Trump said recently he was working to lower beef prices and could boost imports from Argentina.
If Argentina shipped all its beef exports to the U.S., Smithfield could see positive impacts on its Nathan’s Famous hot dogs that use beef trimmings, Smith said, adding such imports would probably not lower prices significantly for typical consumers.
REDUCED EXPORTS TO CHINA
With Washington and Beijing locked in a tariff dispute, reduced U.S. exports of certain byproducts to China constrained fresh pork prices, Smithfield said.
“We haven’t exported the volume that we had last year,” Smith said.
Smithfield ships offal, such as pig stomachs and hearts that U.S. consumers generally do not buy, to China, with most shipments subject to 57% tariff rates in the quarter, it said.
Trump was expected to meet Chinese President Xi Jinping on Thursday.
(Reporting by Savyata Mishra in Bengaluru and Tom Polansek in Chicago; Editing by Shreya Biswas, David Holmes and Alexander Smith)