In its interim results for the six months to 30 June 2019, the business reported a 0.4% year-on-year decrease in revenue and an 11.8% drop in operating profit while total profit fell 16.9%.
The group’s China fresh pork division was particularly hit during this period, seeing a 31.6% drop in operating profit for this region although its revenue grew 4.5%. Slaughter numbers in China started off strong in the reporting period, with the business taking advantage of its “widely established production and logistics facilities to seize the opportunity of the relatively low hog prices before Chinese New Year to expand production scale and sales channels”. However, it reported that as the impact of ASF manifested gradually, volume was constrained by the reduction in market supplies of live hog and softening in demand.
Up to the end of the Review Period, over 140 cases of ASF in 31 Chinese divisions were reported. As a result, the Chinese government adopted measures such as immediate culling of infected hogs and restricted transportation of live hogs to control the epidemic. As many hog farmers are adversely affected by ASF, their “incentive to replenish stock was lowered”.
Looking ahead, the business said the continued presence of ASF will affect prices in China. “Under the overlay pressure of the wide-spread of ASF and unstable geopolitical situation nowadays, we anticipate the greatest challenge in China is the continuously soaring hog prices as a result of growing supply shortage which will push down our packaged meats margin. The greatest challenge in the US is the on-going over-abundant supply of meats which will suppress our fresh pork profitability.
“In China, we are making every endeavor to prevent and control ASF to provide customers with safe and high-quality products.”
Other highlights for the business included the acquisition of Poland-based Pini Polonia and two Romanian packaged meat companies Elit SRL and Vericom 2001 SRL. It also entered into joint ventures with Mexican businesses Granjas Carroll de Mexico and Norson Holdings.
Global Meat News will be hosting a webinar on African Swine Fever and its impact on the international meat market on 29 October. To get involved, contact Aline Henderson on our commercial team on email@example.com.