‘Challenging market conditions’ in the US pork have forced China’s WH Group to significantly reduce its first-quarter profit outlook.
The WH Group is one of the biggest pork businesses in the world, which, as well as being a huge producer in China, owns of US-based Smithfield Foods, a massive global player in the pork market in its own right. The group has warned in a filing with the Stock Exchange of Hong Kong, that its profit attributable to shareholders is likely be down by around 56% from the previous year’s print of about $395m, according to a report on the Just Food website.
The profit outlook is preliminary and could be subject to change, the company said. The group’s final results for the first quarter of 2023 are due to be published in late-April.
In 2022, WH Group reported profit attributable to shareholders, based on ‘pre-biological fair value adjustments’, of $1.4bn, according to the report.
“Hog raising costs remain elevated, while pork prices have been adversely impacted by softer consumer demand. The gross cut-out margin, the difference between the processed value of pork and hog costs, has also declined,” the company said.
WH Group’s profit warning is the latest blow for the pork sector, particularly in North America, according to Just Food.
Canadian processor Hylife Foods revealed last week it could be forced to close a plant in Windom, Minnesota, unless the company can find a buyer, with the company citing a number of ‘challenges’, including inflationary pressures and high grain costs.
In Canada, local pork producer Olymel announced on Friday that the business is to close yet another plant in its home market, the fourth time since November the company said it would close a facility. It blamed Covid-19, labour shortages, rising input costs and ‘instability’ in export markets.