OMAHA (DTN) -- Smithfield Foods on Monday filed documents with the Securities and Exchange Commission (SEC) to hold an initial public offering of shares on Nasdaq.
Smithfield would trade common stock under the "SFD" ticker symbol. The timing, number of shares and price range for the proposed IPO have not been determined, Smithfield stated in a news release.
Documents filed with the SEC provided an overview of sales and business dealings by Smithfield and WH Group in recent years.
The country's largest pork producer, Smithfield, had $14.46 billion in annual sales of packaged meat in fiscal year 2023, down from the previous two years.
Chinese-based WH Group acquired Smithfield in 2013.
Smithfield noted that Walmart accounted for just over 11% of the company's sales each of the past three years. No other customer accounted for more than 10% of sales.
Exports accounted for 15.9% of Smithfield's sales in 2023, up from 2022, but still lower than 2021's volume. Smithfield noted it exports to 35 countries and has a joint venture in Mexico.
The company cited that it has $7.6 billion total capitalization with $5.6 billion in shareholder equity and $2 billion in long-term debt, as of Sept. 29, 2024.
Smithfield has been reducing the size of its hog production operations and buying more hogs from independent suppliers. Since 2019, Smithfield has gone from peak production of 17.6 million head in 2019 to 14.6 million head at the end of 2024. The company plans to continue looking for ways to reduce its internal production. By the end of 2025, Smithfield expects its production to go down to roughly 11.5 million head.
In December, Smithfield sold approximately 150,000 sows in North Carolina to Murphy Family Farms. Smithfield also took a 25% interest in the company, which will provide Smithfield with about 3.2 million hogs a year. Smithfield made a similar move with VisionAg Hog Production, selling 28,000 sows while taking an investment position in the company as well. Also in December, Smithfield sold its hog facilities in Utah for $58 million but will lease back certain operations.
In November, Smithfield sold certain hog farms in Missouri for $32 million, which resulted in a $4 million loss.
Smithfield cited its decisions to reduce activities in California, including closing a facility in Vernon, California. Smithfield said, "High taxes, high utility costs and a challenging regulatory environment negatively impacts our ability to operate efficiently and profitably." The company also mentioned its decisions to close sow farms in Missouri and several nursery farms in Utah.
Under "risk factors," Smithfield cited several issues, including that the company is "significantly impacted by the cyclical nature of commodity prices" for both livestock and feed ingredients. Supply chain challenges and risks such as cybersecurity were also detailed.
In its filing, Smithfield stated it will remain a "controlled company" with its Chinese-based ownership group, WH Group, continuing to hold most of the common stock. The filing left blank details of percentages but in a letter to its shareholders in November, WH Group stated it planned to sell about 20% of its value in public stock. WH Group is listed on the Hong Kong Stock Exchange.
Given the ties to the Peoples Republic of China (PRC), Smithfield noted that changes in the relationship between the U.S. and China could adversely affect its business and financial conditions.
"More broadly, changes in political conditions in the PRC and changes in the state of U.S.-PRC relations, including any tensions relating to potential military conflict between the PRC and Taiwan, are difficult to predict and could lead to policies or regulations that adversely affect our business, financial condition or results of operations on account of our controlling shareholder's ties to the PRC," Smithfield stated.
Smithfield has 34,000 employees in the U.S. and another 2,500 in Mexico, with about 46% of the workforce covered by a collective bargaining agreement or members of a union.
When it comes to its workforce, Smithfield noted increased enforcement could disrupt the company's workforce and operation. "Immigration reform continues to attract significant attention in the public arena and U.S. Congress. If new immigration legislation is enacted, such laws may contain provisions that could increase our costs in recruiting, training and retaining employees, increase our costs of complying with federal law in reviewing employees' immigration status, and create employee shortages."
Smithfield also cited challenges with continued consolidation in the retail industry, including supermarkets, as a problem that increases exposure. Retailers are expanding their use of private labels, for instance, which impacts the volume of sales.
Additionally, the company noted it is one of 16 defendants in a series of purported class actions alleging antitrust violations in the pork industry. The defendants all relied on reports from Agri Stats Inc. that used proprietary information. So far, Smithfield stated the company has paid $194 million to settle claims.
See, "Smithfield Sells Shuttered 1,370-Acre Hog Farm in Missouri at Auction for $5.6 Million," https://www.dtnpf.com/…
Also see, "Smithfield Reaches $2M Settlement With Minnesota Over Child Labor Violations at Packing Plant," https://www.dtnpf.com/…
Chris Clayton can be reached at Chris.Clayton@dtn.com
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