Smithfield Foods Rating Upgrade
S&P Global Ratings announced on 9 September 2026 that it has upgraded Smithfield Foods Inc.'s issuer long‑term credit rating from BBB‑ to BBB and its short‑term rating from A‑3 to A‑2. The agency also lifted the issue‑level rating on the company’s senior unsecured notes to BBB from BBB‑. This rating action follows the recent upgrade of Smithfield’s ultimate parent, WH Group, to BBB+ with a stable outlook.
S&P expects less volatile commodity hog production and strong cash flow at WH Group over the next few years. It notes that Smithfield continues to rationalise its hog production footprint and improve efficiency in its pork‑processing network. The rating agency reported that Smithfield’s S&P‑adjusted leverage stood at 0.9 times for the twelve months ended 30 June 2026.
Since 2019, Smithfield has reduced annual hog production by 37 percent, moving from 17.6 million heads to 11.7 million heads, with a medium‑term target of 10 million heads. The reduction lowers the company’s exposure to the extreme earnings volatility experienced in 2023, when the hog segment posted a $756 million operating loss. S&P estimates that the smaller footprint and retained farm restructuring would have cut the 2023 operating loss by more than 50 percent on a pro‑forma basis.
The packaged‑meats segment has generated over $1 billion in annual operating profit for four consecutive years and now contributes more than 80 percent of Smithfield’s consolidated profitability. This higher‑margin mix has lifted Smithfield’s S&P‑adjusted EBITDA margin to approximately 12 percent on a last‑twelve‑month basis as of 30 June 2026, well above the 5 percent trough seen in 2023 and higher than the 7‑9 percent levels recorded pre‑pandemic.
S&P highlighted that Smithfield’s low leverage provides capacity for growth‑capital expenditures and mergers and acquisitions. The company plans to deploy excess cash toward its modernisation and M&A strategy, including a $1.3 billion capital‑expenditure programme to modernise its Sioux Falls facility and bolt‑on acquisitions such as the planned $450 million‑to‑$500 million purchase of Nathan’s Famous. WH Group holds 87 percent of Smithfield’s common stock, and S&P estimates that Smithfield contributes more than half of WH Group’s EBITDA.