WH Group Ltd., the parent company of U.S.-based Smithfield Foods, reported a significant increase in profits for the first quarter despite declines in revenue and sales volumes. The growth in profits was mainly driven by improvements in its U.S. operations, which offset a decline in China. Operating profit for the three months ended March 31 rose by 37% to $501 million, indicating a positive turnaround for its North American operation.
The company attributed its improved performance to higher pork prices and a series of reform measures that helped reduce losses related to hog farming, slaughtering, and sales of fresh and frozen pork in the U.S. and Mexico. WH Group also reported a profit of $288 million from the sale of packaged meats in the region, indicating a positive sign for competitors such as Tyson Foods Inc. and JBS SA, who are set to report earnings next month.
However, WH Group experienced a 77% decline in profit from pork operations in China due to intense market competition. The company has adjusted pork production levels in China, North America, and Europe based on market dynamics and has optimized its portfolio of packaged meats to address weak consumption trends. Looking ahead, WH Group anticipates that macro-economic challenges may impact consumer confidence and consumption demand, although its core business is expected to remain resilient for the remainder of the year.
