WH Group Announces First Quarter 2023 Results

Sample article from our Food & Beverage

April 28, 2023 (press release) –

- Profit attributable to owners of the Company amounts to USD174 million

WH Group Limited ("WH Group" or "the Company", HKEX stock code: 288) is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the three months ended March 31, 2023 (the "Review Period").

Highlights

* Sales volume of packaged meats and pork decreased by 1.0% and 1.2% to 820 thousand metric tons and 1,021 thousand metric tons, respectively;

* Revenue increased by 2.9% to USD6.743 billion;

* Operating profit decreased by 43.1% to USD365 million; and

* Profit attributable to owners of the Company, before biological fair value adjustments, decreased by 55.9% to USD174 million.

Overall Business Performance

During the first quarter of 2023, WH Group's operations were continuously impacted by high input costs, softer consumer demand and volatile hog and meat prices. The Group adjusted its operating strategies, and accelerated structure optimization, cost saving and efficiency improvement with the profitability of packaged meats remaining at high levels. However, the pork business in the U.S. suffered significant losses due to unfavorable market dynamics, placing pressure on the financial performance of the Group.

During the Review Period, revenue of the Group increased by 2.9% compared with the same period last year to USD6.743 billion. Operating profits decreased by 43.1% year-on-year to USD365 million. Profit attributable to owners of the Company, before biological fair value adjustment, was USD174 million, a decrease of 55.9% year-onyear.

Performances of Business Segments

Packaged Meats Segment

During the Review Period, sales volumes of our packaged meats were 820 thousand metric tons, a decrease of 1.0% year-on-year. In China, the increase of 3.1% in sales volume was mainly due to the recovery of certain channels from pandemic controls. In the U.S., sales volume decreased by 6.1% mainly due to weakened demand. Sales volume in Europe increased by 3.8% primarily due to organic growth and a bolt-on acquisition.

Revenue of our packaged meats during the Review Period decreased by 3.5% yearon-year to USD3.457 billion mainly due to the trade down effect and lower commodity pork values in the U.S.. Operating profit also decreased by 7.0% year-on-year to USD554 million. In China, operating profit decreased by 13.8% compared with the same period last year due to the negative impact of currency translation and an increase in raw material costs. In the U.S., our operating profit remained flat despite reduced volume as the raw material costs was lower, and we adjusted our product mix and improved our operational efficiency. In Europe, operating profit decreased by 16.7% as we continued to experience higher raw material and utility costs.

Pork Segment

Sales volume of pork decreased by 1.2% to 1,021 thousand metric tons during the Review Period. In China, the U.S. and Mexico, our sales volume remained stable. In Europe, sales volume decreased by 5.1% as the availability of live hogs was low.

Revenue during the Review Period increased by 8.4% year-on-year to USD2.852 billion as pork prices increased in China and Europe. However, we recorded an operating loss of USD170 million during the Review Period (same period in 2022: operating profit of USD45 million). The loss was attributed to our business in the U.S., which was challenged by unfavorable market conditions. Hog raising costs remained elevated while pork prices were adversely impacted by softer consumer demand. The industry gross cut-out margin, or the spread between meat values (carcass cut-out published by the U.S. Department of Agriculture) and hog costs (lean hog index published by Chicago Mercantile Exchange, Inc.), also declined significantly during the Review Period. In contrast, our businesses in China and Europe improved during the Review Period as profitability of the sale of fresh products increased in China and the high level of pork prices resulting from insufficient supplies outweighed the increase in raising costs in Europe.

Outlook

Mr. Wan Long, Chairman of WH Group, said, "In the U.S. and Europe, although commodity and energy prices have peaked, the elevated level of prices will continue to impact our production costs for certain periods of 2023. Meanwhile, macroeconomic headwinds have weakened consumer confidence and therefore weighed on demand in the U.S. To meet these challenges, we will focus on optimizing our industrial value chain and rigorously continue to promote the adjustment of our product mix while managing prices and controlling costs. We will also leverage on our global presence to better deploy resources and create synergies. With the joint efforts of our global management team, we will strive for the best results amid the highly uncertain external environment."

About WH Group Limited (HKEX stock code: 288)

WH Group Limited is the largest pork company in the world with the top market share in China, the US and some markets in Europe. It owns many well-recognized and trusted brands and stands above the rest with global market leadership in all key segments of the pork value chain, including packaged meats, fresh pork and hog production. The Group conducts its operations through Henan Shuanghui Investment & Development Co., Ltd., the largest animal protein company in Asia, and Smithfield Foods, the largest pork company in the US. For more information, visit www.whgroup.com .

Source: WH Group Limited

[Category: Financial Results]

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