August 18, 2017
China's pork producer, WH Group, has disclosed a 1% increase in net profit for the first half of 2017 - a disappointing result dashing analysts' expectations, the South China Morning Post reported.
According to WH Group, the inflation of raw materials cost is to be blamed. Taking biological fair value adjustments for the first half into account, the minute 1% increase rose from US$551 million in the same period of 2016 - amounting to US$557 million in net profit. The result fails to meet US$615 million as estimated by analysts polled by Bloomberg.
Against the backdrop of the interim results briefing, WH Group chairman and chief executive Wan Long thinks a trade war between the US and China will not happen as both are the biggest food exporter and food importer, respectively. Wan pointed to the opportunity for cooperation rather than aggressive trade policies.
Wan also claims that WH Group is not feeling hindered by the Chinese government despite the latter's move to impose tighter rules on Chinese companies acquiring assets outside China. In fact, according to Wan, WH Group is witnessing a "very smooth" expansion in Europe. He attributed the low cost of Chinese food production for the uptrend.
"We will conduct all of our outbound acquisitions through Smithfield from now on," Wan added. The company bought over US-based Smithfield Foods, formerly the world's biggest pork producer, for US$4.7 billion in 2013. It had also, through Smithfield, acquired Polish meat processing companies Pini Polska, Hamburger Pini and Royal Chicken.
While WH Group will continue to optimise its product portfolio, pork products will remain the mainstay of its business, Wan said.
- South China Morning Post