S&P Global Lifts Smithfield Foods' Credit Rating to 'BBB' on Parent Upgrade, Operational Shift

S&P Global Ratings has raised its issuer credit rating on Smithfield Foods Inc. to 'BBB' from 'BBB-', attributing the move to an upgrade of the pork producer's ultimate parent, WH Group, and Smithfield's own improved operational and financial profile. The outlook is stable, mirroring that of WH Group, which was upgraded to 'BBB+'.

The Rating Action

In its review, the credit rating agency announced several upgrades for the U.S.-based food company. The action reflects growing confidence in the financial stability of both Smithfield and its majority owner.

• Issuer Credit Rating: Upgraded to BBB from BBB-
• Short-Term Credit Rating: Raised to A-2 from A-3
• Senior Unsecured Notes: Lifted to BBB from BBB-

S&P stated it anticipates less volatile commodity hog production and strong cash flow generation from parent company WH Group over the next few years. Smithfield, which contributes more than half of WH Group’s EBITDA, is a core component of this outlook.

Strategic Shift Drives Profitability

A key driver behind the upgrade is Smithfield's strategic pivot away from the volatile hog production segment toward its more stable and profitable packaged meats business. The company has been actively rationalizing its hog production footprint and enhancing efficiency in its processing network.

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Since 2019, Smithfield has reduced its annual hog production by 37%, from 17.6 million head to 11.7 million. This move is designed to mitigate exposure to the extreme earnings swings that led to a $756 million operating loss in the hog segment in 2023. S&P estimates that on a pro forma basis, this smaller footprint would have cut those 2023 losses by more than 50%.

Meanwhile, the packaged meats division has become the company's primary profit engine, delivering over $1 billion in annual operating profit for four consecutive years and now contributing over 80% of consolidated profitability.

Improved Financial Metrics

This strategic shift has significantly improved Smithfield's financial health. The company's S&P Global Ratings-adjusted EBITDA margin was near 12% for the 12 months ended June 30, 2026, a substantial recovery from the cyclical trough of 5% in 2023 and above pre-pandemic levels of 7%-9%.

Furthermore, the company's leverage is low, with its S&P-adjusted debt-to-EBITDA ratio standing at 0.9x. The rating agency noted this strong balance sheet provides ample capacity for growth-oriented capital expenditures and potential mergers and acquisitions, such as its planned $1.3 billion modernization of its Sioux Falls facility.