SMITHFIELD, VA. — Smithfield Foods exited the US public equity market roughly a decade ago but has emerged as a completely different company, according to president and chief executive officer Shane Smith.

On March 24, the company was added to the Russell 1000 Index, a key benchmark for large-cap US stocks. The inclusion became effective after the market close on March 21 as part of the quarterly addition of eligible initial public offerings to the Russell Indexes. Executives of the pork processor held the company’s first financial results conference call on March 25 to discuss full-year and fourth quarter fiscal 2024 results in addition to the company’s strategy for future growth, which the company expects packaged meats will be the key driver.

“Today we are a new company, a package meats company with leading market share,” Smith said. “The US value added package meats market represents a $46 billion opportunity and is supported by long-term trends, including consumer demand for higher protein diets, high-quality nutrition, product versatility and convenience.”

Smithfield currently occupies the number two branded market position by volume across 25 key packaged meats categories with a broad portfolio of well-known brands, including its namesake Smithfield brand as well as Nathan’s Famous, among others — value brands such as Armor and Cook's, super-regional brands such as Farmland and Farmer John, and specialty brands like Carando and Margherita. Smith said the company complements this strong brand portfolio with private label offerings, creating a spectrum of price points to appeal to consumers anywhere on the value chain, and making Smithfield a strategic partner to its customers.

“Over the past 10 years, we have gone through a significant transformation into a more unified, cohesive and profitable company,” Smith said. “We’ve built a solid foundation that positions us well for the future with a strong balance sheet and ample cash flow to support our growth strategies and increase value for our shareholders. Today, we announce our board declared a quarterly dividend of 25¢ per share, underscoring our commitment to return value to shareholders.”

For the 12 months ended 2024, on a consolidated basis, the company delivered adjusted operating profit of $1.0 billion dollars and adjusted operating profit margin of 7.2%. This was a major improvement compared to adjusted operating profits of $258 million in 2023 due to the challenging industry conditions for pork production, Smith said.

Net sales for fiscal 2024 were $14.1 billion, compared to $14.6 billion for fiscal 2023, primarily due to   lower fresh pork harvest levels, which aligns with Smithfield’s optimization strategy, and lower external grain sales in the hog production segment.

“Excluded from our 2024 adjusted operating results were $87 million of COVID-era employee retention tax credits, which had been deferred until 2024,” said Mark Hall, chief financial officer at Smithfield. “Additional adjustments to 2024 results were largely offsetting. Full-year 2024 adjusted net income from continuing operations attributable to Smithfield of $714 million compared to $132 million in the prior year.”

 Adjusted earnings per share were $1.88 compared to 35¢ in 2023, Hall said.

For the fourth quarter ended Dec. 29, 2024, Smithfield reported net sales of $4.0 billion.

Operating profit for the period was $335 million.

Adjusted operating profit was $315 million, up from adjusted operating profit of $230 million in the fourth quarter of 2023.

The company posted an operating margin of 8.5% and adjusted operating margin of 8.0%

Packaged Meats segment operating profit was $313 million. Operating profit margin was 12.7%.

The company reported net income from continuing operations per common share attributable to Smithfield of 56¢. Adjusted net income from continuing operations per common share attributable to Smithfield was 52¢.

Packaged meats performance

Excluding 2020, the Packaged Meats segment achieved a record operating profit of $1.2 billion; adjusted operating profit of $1.1 billion.

Smithfield reported Packaged Meats segment operating profit margin of 14.0%. Adjusted operating profit margin was 13.6%, up 70 basis points from 12.9% in fiscal 2023, the company said.

“Packaged meats is our cornerstone business,” Hall said, “except for 2020, when the segment’s performance was negatively impacted by COVID. Profitability has increased each year over the last decade, and profit margins have more than doubled. Packaged meats annual sales increased by a half percent to $8.3 billion in 2024.  A 3.1% increase in average price more than offset volume declines of 2.5%.”

Hall said lower volumes reflect Smithfield’s strategy to decrease sales of lower margin heritage products like seasonal hams while simultaneously increasing unit velocity of higher margin items such as lunchmeat and dry sausage. These products command a higher price by providing on-trend and innovative solutions to consumers and customers, he added.

“We also saw lower volumes of bacon resulting from the group housing legislation in California and Massachusetts,” Hall noted. “Higher average selling price was driven by product mix shifts, like the ones I just described, as well as the pass through of higher input costs due to an increase in the pork value chain year over year.”

Hog reduction strategy

The company’s Fresh Pork segment achieved a third consecutive year of profit expansion, the company said. Improvement was largely driven by the company’s initiative to drive cost savings in manufacturing and distribution as well as strong demand for US pork.

“I’m pleased to report that both Smithfield and the hog production industry at large have moved beyond one of the most challenging economic cycles we’ve seen in decades,” Smith said.

In 2024, Smithfield generated a more than $600 million improvement in its hog production segment profitability.

“Our strategy is to further reduce volatility in our hog production segment, to deliver more consistent profitability and cash flows in the future,” Smith said. “At our high point, we produced 17.6 million hogs in 2019. In 2024, we had reduced that number to 14.6 million, and in 2025, we expect to produce about 11 and a half million hogs.

“This marks significant progress toward our goal of reducing internally produced hogs to approximately 30% of the needs of our fresh pork segment,” Smith said. “In the medium-term, reducing the scale of our hog production operations will lower our exposure to commodity market risk, and we expect that this will help stabilize our earnings and our cash flows.”

 Hall said the segment rebounded significantly in 2024 due to relief in commodity markets and actions the company took to optimize operations for the full year. In 2024, Smithfield reported a hog production adjusted operating loss of $152 million versus a loss of $756 million in 2023.

“It’s important to note that 2023 was the most challenging year for the hog production industry in over a decade,” Hall said. “2023 represented the perfect storm, including an oversupply of soft global demand and higher raising costs. These tailwinds resulted in sizable losses in our hog production segment last year.”

 For 2024, hog production segment sales decreased by $315 million or 9.5% year-over-year, driven by a 7.8% decrease in the number of hogs sold due to the company’s hog production reformation activities, and a $171 million decrease in grain sales to external customers.

“This is partially offset by a 6.2% increase in our average hog sales price, which primarily reflected a higher CME hog market prices,” Hall said. “And please note that over 80% of the revenue generated by our hog production segment represented internal sales through our fresh pork segment, and again, was eliminated on consolidation.”

Core growth focus

 In 2025, Smith said, Smithfield plans to continue to expand package meats operating profit through ongoing product mix improvements, volume growth and innovation.

“Two key areas of product mix improvement and volume growth are dry sausage and packaged lunch meat,” Smith said. “In 2024, we expanded our dry sausage production capacity by 50 million lbs, positioning us well to grow this higher-margin category.  

“Between 2019 and 2024, we increased units of dry sausage sold by 37%, demonstrating our success in growing this category. We also continue to successfully convert holiday hams into smaller, more frequently purchased and higher margin items. One of those items is packaged lunch meat, led by our flagship brand, Smithfield Prom Fresh, which commands a premium at retail.”

Citing data from market research firm Circana, Smith said lunch meat represents a $6.4 billion market opportunity. Smithfield holds the number five position at 8% share.

“We believe this gives us a large opportunity to increase our packaged lunch meat volume and improve our mix by converting our legacy seasonal hams into a more profitable category,” Smith said.

In the area of innovation, Smithfield has “a pipeline of products that address consumer trends and new flavor profiles, creating convenient meal solutions and small package sizes in 2025.”

“We are addressing these trends with new offerings in our Armor, Nathan’s and Smithfield Anytime Favorites lines,” Smith said. “Innovation extends to being a nimble partner at our retail and our foodservice customers.”

Eyes on tariffs

Smith and company leadership are closely monitoring the state of tariffs in the current geopolitical environment, which he described as “very fluid.”

“We have an experienced team that has worked together for more than 20 years and has navigated through numerous cycles,” he said. “While we are not immune to the impact of tariffs, we have built flexibility into our system and established multiple outlets for our fresh pork products. We plan to leverage our leadership position to maximize product value across domestic and export channels, as well as in adjacent markets such as pharmaceuticals, pet food, pet treats and skins for snacking.”

The company also will leverage improvements in operating efficiency in processing plants and across the supply chain to increase profitability in fresh pork.

Finally, Smithfield will continue to look at opportunistic mergers and acquisitions in North America.