October 24, 2023
WH Group cites increased input costs and depressed demand for the difficult U.S. business conditions the company has endured through the first nine months of 2023. In their recent unaudited quarterly results report, the parent company of Smithfield Foods says it expects the “unfavorable operating landscape overhang” to continue the rest of the year.
Total revenue decreased by 4.5% to US $19.488 billion, while profit attributable to owners of the company, before biological fair value adjustments, decreased by 37.7% to US $569 million. In the United States and Mexico, WH Group recorded an operating loss of US$551 million.
“Such loss was primarily attributable to the unfavorable market conditions in the U.S., which included the high costs of hog production and low sales value of pork products,” WH Group notes.
The average hog price in the People’s Republic of China was RMB15.42 (equivalent to approximately US$2.19 per kilogram), a decrease of 10.6% from the first nine months of 2022. In the U.S., the average hog price decreased by 17.7% to US$1.40 per kg during the first three quarters, which WH Group says was “driven by soft demand.” However, in Europe during that same time period, the average carcass price of the member states increased by 29.3% to Euro 2.34 (equivalent to approximately US$2.54) per kg, as supplies tightened.
In the U.S., sales volume of packaged meats decreased by 6.8% and revenue decreased by 11.3%. Pork sales volume in the U.S. and Mexico decreased by 4.5%, which WH Group says was primarily due to business restructuring. Total revenue for both countries decreased by 9.1% as both sales volume and prices went down during that period.
To deal with short-term financial challenges, the company says it will focus on optimizing its industrial value chain, and will continue to promote adjustment of product mix, expanding its sales network and managing prices and control costs.
Earlier this week the Wall Street Journal reported WH Group actively considering a return to the U.S. stock market. However, a company spokesperson for Smithfield Foods said a U.S. public offering is something the company routinely evaluates and there is “no definitive plan or timetable.”
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