November 14, 2022

WH Group re-calibrates business, with eye on expansion in Europe

Major Chinese pork processor WH Group has started to reorganize its business, first by selling off a seasoning unit in the United States while trying to expand its presence in the European market through acquisitions.

In an attempt to lessen reliance on the US and China for about 90% of sales, WH Group will change its earnings structure and attempt to expand further into the large European markets. The company said in October that it will sell its US-based Saratoga Food Specialties seasoning maker to Solina Group, a European company in the same business, through its wholly owned US subsidiary Smithfield Foods. The deal, valued at $587 million, is expected to be completed by the end of the year.

Saratoga Food chalks up $280 million in annual sales through development, production and sales of sauces and dressings. WH said in a news release that it will reallocate proceeds from the deal for future investment in the US.

For further growth, WH has been developing markets in Europe. The company took over three meat processors in Poland in 2017. It also acquired a stake of just over 33% in Polish meat processor Pini Polonia in the same year and converted it into a wholly owned subsidiary in 2019.

In 2021, WH placed Mecom Group, which has processing and other facilities in Slovakia and Hungary, under its umbrella.

WH will continue its aggressive pursuit of acquisitions among European pork processors, said Wan Long, the president and chief executive officer of the company, at an online news conference held last August. He also referred to WH's plan to expand its poultry business in China and Europe.

In the first half of 2022, WH posted some 10% of total sales from Europe, up 3 percentage points over the past five years. Nevertheless, the company remains overwhelmingly reliant on US and Chinese markets as it logged 57% of sales from the US and Mexico and 33% from China in the six months.

WH's sales of processed meat products such as ham and sausage, which account for about half of WH's total sales, expanded 9% due in part to price increases in the US, where demand is strong. Although grain prices rose in Europe, WH continued to boost sales on an increase in sales volume and price hikes.

- Nikkei Asia