Decreasing hog prices cause static sales for WH Group
During Q3, China’s average hog price per kilogram (kg) fell by 19.2% in comparison to last year, due to “sufficient market supply”, according to the company.
WH Group’s US division was also hit, as the average hog price and pork cutout value for the period decreased, respectively, by 10.1% to US$1.10 per kg and 11.9% to US$1.70 per kg.
As a result of these factors, total revenues for the group were up 1.8% compared to last year, but underlying profit was US$756m, 3% lower than the same period in 2017.
Falling hog prices also affected the business’ fresh pork division sales, as revenues were reduced by 3.5%. Operating profit for the fresh pork business fell significantly by 61.1%, due to the decline in its US operating profit, which outweighed the growth in operating profit in China and Europe.
Despite declining trending hog prices, the group’s average sales for its packaged meats business increased and its operating profit rose 12.5% year-on-year.
WH Group’s chairman Wan Long said the company would be taking proactive measures to overcome the challenges.
“The global political economic climate and industry landscape continues to evolve. The oversupply and trade issues impacted our operation in the US. However, being a geographically diversified and fully integrated consumer goods company, with branded packaged meats as our core business, we are building strong resilience from our distinctive market position,” said Long.
“We will constantly strive for unceasing growth through resources integration and volume expansion, as well as operational improvement.”
Trade tensions have been a long-running sales hindrance for WH Group as its US pork segment declined significantly in its annual results for the six months ended 30 June 2018.
