Switzerland’s Bell Food Group has a warned its half-year profits will be down from last year amid a surge in global pork prices partially linked to the outbreak of African swine fever in China.

The Zurich-listed manufacturer of fresh meats, poultry, charcuterie and ready meals said EBIT for the six months through June is likely to be below CHF50m (US$50m), compared to CHF55.2m a year earlier. Pork prices have increased 30% in 2019, it said, leading to higher procurement costs in the European Union which the company has not yet been able to fully pass on to the consumer.

Bell explained that the outbreak of African swine fever in China has “led to major upheavals in the international market for pork” just as exports from the EU to the world’s second-largest economy have increased, which, combined with lower production, has cut supply in Europe and exacerbated the higher pork price situation.

Gian Marco Werro, a consumer goods analysts at MainFirst Schweiz, said in a follow-up note that the projected CHF50m EBIT print, or thereabouts, would be well below its own estimate of CHF70m for the first half. It forecasts earnings per share will be around 24% lower for the full year.

The company, which owns brands such as Hügli, Eisberg and Hilcona, added that it had particularly felt the affects in its international charcuterie segment, most noticeably in Germany. Meanwhile, Bell said the reorganisation of its Bad Wünnenberg plant in Germany and the associated non-recurring costs, allied with a weak start to the summer barbecue season, “have had an additional negative impact on earnings”.     

Despite the negative outlook, Bell said its Switzerland unit is doing well, while the convenience division “continues to develop very positively”.

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By GlobalData

Bell will announce its official full-year results on 14 August.