August 28, 2019


COFCO joins list of Chinese companies to report ASF-linked profit losses



Declining hog prices and spending on protections against African swine fever have driven the first-half profit loss of Chinese pig producer COFCO Meat Holdings Ltd, which witnessed a  ¥276 million (US$38.9 million) loss from last year.


The ASF outbreak in China has also affected the profits of other major producers, including Muyuan Foods Co. and Wens Foodstuff Group.


After adjusting for the value of its biological assets, mainly sows and unsold pigs, COFCO said profit attributable to the company's owners came to ¥142 million (US$19.8 million), up from a ¥243 million (US$34 million) loss a year ago. Hog prices are significantly higher this year due to the disease outbreak.


COFCO added that it would not pay a dividend for the first half.


The company, a unit of state-owned grains trading house COFCO Group, produced 1.45 million pigs in the first six months, up 15% on a year ago, but the segment generated losses of ¥436 million (US$61 million), about four times last year's loss.


Despite the losses, COFCO planned to increase the number of sows to take advantage of the tight supply of hogs following the ASF outbreak. According to the company, tight supplies of pigs will continue into 2020, thus supporting prices.


COFCO said it also plans to build a third slaughterhouse in northeast China to meet a shift away from transporting live hogs to transporting meat instead. The plant will have capacity for one million pigs.


Revenues at the group rose 35% to ¥4.4 billion (US$614.3 million), thanks to a large rise in meat import volumes.


Sales of imported meat came to ¥1.68 billion (US$235 million), up 77% from a year ago.


About half of the import volumes, or 31,000 tonnes, were beef, which rose 129% on a year ago, and COFCO said expanding beef import volumes was a "strategic focus".


A significant pork shortage in China - due to the ASF outbreak - has been anticipated, leading to the country's higher meat imports this year as buyers stock up.


- Reuters