WH Group Ltd., which owns US-based Smithfield Foods, reported a 37% increase in operating profit for the first quarter, driven by improvements in its US operations. Despite a decline in revenue and sales volumes, the company’s net profit rose to $501 million. The boost in profits was attributed to higher pork prices and cost reduction measures implemented in hog farming, slaughtering, and sales of fresh and frozen pork in the US and Mexico.
The positive outcome suggests that the worst may be over for WH Group’s North American operations, which struggled with high costs and weak consumer demand last year. However, the company’s profit from pork operations in China decreased by 77% to $9 million due to strong competition in the market. WH Group has reduced pork production in China, North America, and Europe to address market dynamics in each region and optimize its portfolio of packaged meats.
Looking ahead, WH Group anticipates that macro-economic challenges may impact consumer confidence and demand but expects its core business to remain resilient for the rest of the year. The company’s performance may serve as an indication for what to expect from rivals in the pork industry, including Tyson Foods Inc. and JBS SA, which will report earnings next month.
