HONG KONG – WH Group Ltd., the China-based parent company of Smithfield Foods Inc., released its 2019 first-quarter financial results, showing a fall in net profit and revenue.
According to numbers released by the company for the first three months, net profit was $196 million, down 21 percent from the first quarter of 2018. Total revenue was $5.28 billion, which is down 6 percent from the same period last year.
Oversupply in the US hog market, higher raw material and other costs in China led to decreasing profits, according to WH Group. The continued increased US tariffs from 2019 remain a significant reason pork prices in all markets are down and lower sales volumes are being posted in the US. Also, issues with African Swine Fever (ASF) in several areas of China continue to hit pork especially hard according to the company.
“We expect 2019 to be a year filled with challenges and implied opportunities as the recent exacerbated change of the dynamics in geopolitical relations and spread of ASF increased the uncertainties in our operations in the relevant regions,” the company said in the release. “In any case, we are making every endeavor to increase our competitiveness and improve our profitability. When bio-security and food safety issues are increasingly the concerns, we are providing our customers with products of superior quality by relying on our rigorous quality control and food safety systems.”
The company’s pork revenue worldwide fell by 7.6 percent. However, the external sales volume of fresh pork remained steady with approximately 1.1 million tons.
Operating profit for WH Group declined 10 percent worldwide for the first quarter to $341 million. Hog production in the US and Europe was at $168 million for the quarter.