WH Group Ltd., the owner of U.S.-based Smithfield Foods, reported an increase in profits during the first quarter due to improvements in its U.S. operations and higher pork prices. Operating profit for the three months ended March 31 rose by 37% to $501 million, despite a decrease in revenue and sales volumes, according to a statement from the Hong Kong-based company. Although shares initially rose by 3.5%, they later receded.
The company’s North American operation saw a positive turnaround with a profit of $288 million from the sale of packaged meats in the region, indicating that it has reduced losses related to hog farming, slaughtering, and sales of fresh and frozen pork in the U.S. and Mexico through higher pork prices and reform measures. This improvement is seen as a positive sign for competitors such as Tyson Foods Inc. and JBS SA, who are set to report earnings next month.
On the other hand, WH Group experienced a significant decline in profit from pork operations in China due to intense market competition and macro-economic challenges that impact consumer confidence and consumption demand. To address weak consumption trends, the company has adjusted pork production levels in China, North America, and Europe based on market dynamics and optimized its portfolio of packaged meats. Looking ahead, WH Group anticipates that macro-economic challenges may impact consumer confidence and consumption demand but believes its core business will remain resilient for the remainder of the year.