China’s top ‘butcher’ WH Group posts worse-than-expected profit as trade war hurts US business
The company says its US unit will increase exports to countries like Japan and South Korea as the trade war continues
WH Group, the largest pork producer in China and the world, reported worse-than-expected results for the first half of the year, with its US operations coming under pressure as trade tensions between the world’s two largest economies began to escalate.
The company reported a 7.7 per cent drop in net profit to US$514 million from US$557 million in the year-earlier period as its US and European operations were hurt by lower margins.
Revenue reached US$11.17 billion, up 4.8 per cent from US$10.66 billion after biological fair value adjustments, which is a way to measure value of biological assets including living plants and animals. The first-half revenue was lower than a Bloomberg analyst consensus estimate of US$11.24 billion in revenue.
“The company’s US and European operations were affected by the change in trade environment and industry dynamics,” said WH Group’s chief financial officer Guo Lijun in a press conference on Tuesday.
Guo said operating profit of the company’s US business dropped US$140 million to US$330 million, compared with the year-earlier period, with the fresh pork segment suffering an operating loss of US$15 million due to declining hog prices.
Hog prices in the US dropped 4.6 per cent during the first half, compared to the same period in 2017. In China, the fall was a bigger 23.8 per cent decrease, according to the company.
