WH Group, the world’s largest pork producer, saw its net profit increase by 1% to US$557m in the first six months of 2017.
But the increase – from US$551m in H1 2016 – is below a consensus of analysts’ expectations accumulated by Bloomberg. Analysts were expecting US$615m.
Operating profit grew 7.7% to $901m. Turnover for the period was up by 2% to $10.66bn.
WH Group’s largest division by sales, packaged meats, reported rising turnover but falling operating profit. The unit’s turnover climbed 3.4% to $5.52bn as growth in Europe and the US offset a decline in China.
The division’s operating profit dropped 10.8% to $686m, with profitability in each of the three regions falling. Hog prices in China fell but WH Group said the moving average costs of raw materials “remained relatively high”. In the US, hog prices and raw material costs rose.
WH Group’s fresh pork arm booked a 28.3% rise in first-half operating profit to $245m. Turnover increased 1.2% to $4.64bn.
At the beginning of 2017, the group completed its acquisition of Clougherty Packing, California’s largest pork processor, as well as two brands, Farmer John and Saag’s Specialty Meats, from Hormel Foods.
Last month, the company announced the acquisition of meat processing plants and a hog slaughterhouse in Poland, which it said “helped strengthen the vertically-integrated supply chain in the European market”.
Yesterday, US subsidiary Smithfield Foods announced the full acquisition of US sausage supplier Kansas City Sausage Company and an unspecified investment in local meal-kit maker Chef’d.
Wan Long, the chairman and CEO of WH Group, said: “Looking ahead in the second half of 2017, we will cope with all sorts of uncertainties that would happen in the business and achieve more vigorous growth out of fierce competition.
“In China, we will deepen the optimisation of our product portfolio, develop our sales channels and invest in marketing efforts so as to expand our business scale.
“We will launch new products to the market consistently, with an emphasis on low temperature and mid-end to premium products.
“In the US we will focus on the realisation of the full value of vertical integration. We will build stronger consumer brands and increase market share in key products.
“We expect margins to keep enhancing through improvement in management and uplift in efficiency. As a consumer goods company, branded packaged meat products will continue to be our core business.”