By Gerson Freitas Jr.

WH Group Ltd. — the owner of U.S.-based Smithfield Foods — saw profits rise in the first quarter as a “substantial improvement” in its U.S. operations more than offset a decline in homeland China. 

Operating profit for the the three months ended March 31 rose 37% to $501 million even as revenue and sales volumes shrank, Hong Kong-based WH said in a statement. Shares of the company rose as much as 3.5% before trimming gains. 

A combination of higher pork prices and a series of “reform measures” helped slash losses related to hog farming, slaughtering and sales of fresh and frozen pork in the U.S. and Mexico. The losses were more than offset by $288 million in profit from the sale of packaged meats in the region. 

That’s a sign the worst may be behind for the company’s giant North American operation, which last year was slammed by high costs and weak consumer demand. The result may serve a bellwether for the pork businesses of rivals Tyson Foods Inc. and JBS SA, which report earnings next month. 

Meanwhile, WH Group saw profit from pork operations in China slump 77% to $9 million as the company is faced with “keen market competition.” 

WH said it has slashed pork production in China, North America and Europe “according to the market dynamics in each region,” and moved to “optimize” its portfolio of packaged meats to cope with consumption weakness. Looking forward, the company said “macro-economic headwinds might weigh on consumer confidence and therefore consumption demand,” while its core business should remain resilient for the rest of the year. 

© 2024 Bloomberg L.P.