Sep. 9 at 8:50 PM
S&P Global Ratings upgraded Smithfield Foods’ issuer credit rating to BBB from BBB-, along with its short-term rating to A-2 from A-3 and its senior unsecured debt rating to BBB. The move follows an upgrade of parent company WH Group to BBB+ with a stable outlook.
S&P cited lower commodity volatility, strong cash flow and ongoing efforts to streamline Smithfield’s hog-production footprint and improve processing efficiency. The company has reduced annual hog production 37% since 2019, from 17.6 million to 11.7 million head, with a medium-term target of 10 million. This is expected to reduce exposure to the severe earnings swings that contributed to a
$756 million operating loss in pork operations in 2023.
Packaged meats now generate more than
$1 billion in annual operating profit and over 80% of consolidated profitability. Smithfield’s adjusted EBITDA margin has risen to about 12%, versus 5% in 2023 and 7%-9% before the pandemic.
$SFD