WH Group Ltd., the parent company of Smithfield Foods in the U.S., reported a rise in profits in the first quarter despite a decline in its operations in China. The company saw an operating profit increase of 37% to $501 million for the three months ending March 31, even though revenue and sales volumes decreased. Shares of WH Group rose by as much as 3.5% following the announcement.
The improved profits in the U.S. were attributed to higher pork prices and reform measures that helped reduce losses related to hog farming, slaughtering, and pork sales in the region. The company also benefited from a $288 million profit from the sale of packaged meats in North America and Mexico. This turnaround suggests that WH Group’s North American operations may have weathered the challenges of high costs and weak consumer demand from the previous year.
In contrast, WH Group experienced a 77% decrease in profit from its pork operations in China due to intense market competition. The company has adjusted its pork production in China, North America, and Europe based on market dynamics and is optimizing its portfolio of packaged meats to address consumption weakness.
Looking ahead, WH Group acknowledges that macroeconomic challenges could impact consumer confidence and demand. However, the company remains optimistic about its core business’s resilience for the remainder of the year. This positive outlook from WH Group may also indicate potential success for its competitors, Tyson Foods Inc. and JBS SA, which are set to report their earnings next month.