Business is getting a bit better and operations are being run more stringently in the sausage and sage industries, judging by the earnings reports of two regional companies.

Smithfield Foods Inc., the venerable pork purveyor that now has headquarters in Arlington, said profits for its fiscal year ended May 1 were $2.95 million ($1 a share) compared with $1.6 million (72 cents) in fiscal 1982. Sales grew to a record $570.6 million from $344.4 million, primarily because sales by Gwaltney's, acquired in the middle of 1982, were included only in results for the last half of 1982.

Chairman Joseph W. Luter III called 1983 "a very difficult year for the company and the pork processing industry in general." But Smithfield's institution of operating efficiencies and its gains in productivity were cited as reasons for the improved performance of the company.

Fourth-quarter profits were $1.7 million (52 cents) compared with a loss of $1.1 million in the final quarter of fiscal 1982. Sales were $135.1 million compared with $117.4 million a year earlier.

McCormick & Co. Inc. also has used some austerity measures to produce significant profit increases. In the second quarter, the Baltimore spice maker's sales grew 7.7 percent to $181.9 million, but its profits increased 74 percent to $4.1 million (40 cents a share). For the 1982 period, strained by devaluation of the peso, McCormick's sales were $169.9 million and its profits were $2.85 million.

First-half sales were $349.7 million compared with $326 million, while profits increased 76 percent to $9.9 million (80 cents) from $5.6 million (45 cents).