Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
WH Group Limited ຬݲყϞࠢʮ̡
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 288)
UNAUDITED CONSOLIDATED QUARTERLY RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018
The board (the "Board") of directors (the "Directors") of WH Group Limited (the "Company") is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the nine months ended September 30, 2018 ("9M 2018" or the "Period"). This announcement is made by the Company on a voluntary basis to enhance the practice of good corporate governance and further promote the transparency and accountability of the Company.
HIGHLIGHTS
9M 2018 | 9M 2017 | |
Key operating data | ||
Hogs produced (thousand heads) | 15,004 | 14,892 |
Hogs processed (thousand heads) | 40,969 | 39,279 |
Packaged meats sold (thousand metric tons) | 2,431 | 2,374 |
9M 2017 |
9M 2018 | |
Results before Results after | Results before Results after |
biological fair biological fair | biological fair biological fair |
value adjustments value adjustments | value adjustments value adjustments |
(unless otherwise stated) | (unless otherwise stated) |
US$ million
US$ million
Key financial data Revenue
EBITDA Operating profit
Profit attributable to owners of the
Company
Basic earnings per share (US$ cents)
16,585 1,583 1,208 756 5.15
16,585 1,424 1,208 638 4.35
16,285 16,285
1,752 1,681
1,379 1,379
779 732
5.70 5.35
As at September 30, 2018
As at December 31, 2017
US$ million
US$ million
Total assets
14,995 15,258
Equity attributable to owners of the Company
7,492 7,445
• Revenue increased by 1.8%
• Operating profit decreased by 12.4%
• Profit attributable to owners of the Company, before biological fair value adjustments, decreased by 3.0%
- 1 -
INDUSTRY OVERVIEW
As the largest pork company in the world, our business is closely tied with the hog industry in each market that we operate. Supply and demand drive the movement in prices of hog and meat and consequently impact our inputs (costs) and outputs (sales). In China, the average hog price was RMB12.6 (equivalent to approximately US$1.9) per kilogram ("kg") in the Period, a decrease of 19.2% from that of the nine months ended September 30, 2017 ("9M 2017" or the "Comparable Period") as a result of sufficient market supply. Since August this year, there were certain cases of African Swine Fever outbreak in some provinces or autonomous regions. According to the announcement of the Ministry of Agriculture and Rural Affairs of the People's Republic of China, such cases were under effective control. In the U.S., the average hog price and pork cutout value for the Period decreased by 10.1% to US$1.1 per kg and by 11.9% to US$1.7 per kg respectively. Such decreases were due to the increase in supply and trade disputes between U.S. and certain pork importing countries.
RESULTS OF OPERATIONS
Packaged | Fresh | Hog | |||
meats | pork | production | Others(3) | Total | |
US$ million | |||||
9M 2018 | |||||
Revenue(1) | |||||
China | 2,670 | 2,679 | 6 | 205 | 5,560 |
U.S. | 5,546 | 3,598 | 465 | - | 9,609 |
Europe(2) | 628 | 520 | 41 | 227 | 1,416 |
8,844 | 6,797 | 512 | 432 | 16,585 | |
Operating profit/(loss) | |||||
China | 564 | 126 | 3 | 21 | 714 |
U.S. | 556 | 2 | (79) | (73) | 406 |
Europe(2) | 39 | 10 | 33 | 6 | 88 |
1,159 | 138 | (43) | (46) | 1,208 | |
- 2 - |
Packaged | Fresh | Hog | |||
meats | pork | production | Others(3) | Total | |
US$ million | |||||
9M 2017 | |||||
Revenue(1) | |||||
China | 2,489 | 2,796 | 8 | 165 | 5,458 |
U.S. | 5,560 | 3,742 | 328 | - | 9,630 |
Europe(2) | 476 | 503 | 34 | 184 | 1,197 |
8,525 | 7,041 | 370 | 349 | 16,285 | |
Operating profit/(loss) | |||||
China | 528 | 76 | 19 | (22) | 601 |
U.S. | 488 | 276 | (1) | (93) | 670 |
Europe(2) | 14 | 3 | 90 | 1 | 108 |
1,030 | 355 | 108 | (114) | 1,379 | |
Notes: |
(1) Revenue refers to net external sales.
(2) Europe denotes mainly our operations in Poland and Romania.
(3) Other revenue primarily represents sales of ancillary products and services. Other operating loss includes certain corporate expenses.
Packaged Meats
During the Period, our packaged meats business performed well on a group-wide basis. Sales volume increased by 2.4% as we attained growth in all markets in which we operate. In China, driven by the strong performance of our premium products, our sales volume in China increased by 2.2% over that of the Comparable Period. Revenue of our packaged meats was 3.7% higher in the Period. Apart from volume expansion, the increasing average sales price despite the downward trending hog prices was another contributor. Operating profit of our packaged meats increased 12.5% as compared to the Comparable Period. It was because favorable raw material costs and increase in revenue supported us to increase our inputs in product upgrade in China, to cope with the cost pressure related to wages and transportation in the U.S., as well as to achieve growth in overall margin.
- 3 -
Fresh Pork
Total number of hogs processed in the Period increased by 4.3% over that of the Comparable Period. The growth was driven by the volume expansion of 19.3% in China as a result of our effort in increasing the utilization of our existing processing facilities. External sales volume of fresh pork was about that of the Comparable Period. Revenue from fresh pork during the Period reduced by 3.5% as hog prices decreased. Operating profit of fresh pork went down significantly by 61.1% due to the decline in the operating profit in U.S., which outweighed the growth in our operating profit in China and Europe. Such results showed that the issues of oversupply and trade disruptions suppressed the price of pork to a greater degree than the price of hog and led to erosion of our margin. On a positive note, our business in U.S. improved in the third quarter of this year and turned the operating loss in the first half into operating profit in the Period. The growth of operating profit in China and Europe in the Period were as high as 65.8% and 2.3 times, respectively.
Hog Production
During the Period, hog production volume increased by 0.8%. Revenue from hog production also increased by 38.4% due to increased grain sales and more favorable hedging results, partially offset by lower market prices for hogs. Operating loss in the Period was US$43 million (Comparable Period: Operating profit of US$108 million) as hog prices were lower in all markets. Particularly in the U.S., operating loss increased by US$78 million even though our hedging program was able to mitigate part of the underlying business loss.
OUTLOOK
Global political economic climate and industry landscape continued to evolve. The over-supply and trade issues impacted our operation in the U.S. However, being a geographically diversified and fully integrated consumer goods company with branded packaged meats as our core business, we build strong resilience from our distinctive market position. We will also proactively coping with such challenges and constantly strive for unceasing growth by resources integration, volume expansion as well as operational improvement.
REVIEW OF FINANCIAL INFORMATION
The Group's financial information for the nine months ended September 30, 2018 is unaudited, but has been reviewed by the audit committee of the Company.
By order of the Board
WH Group Limited
Wan Long
Chairman and Chief Executive Officer
Hong Kong, October 30, 2018
As at the date of this announcement, the executive Directors are Mr. WAN Long, Mr. WAN Hongjian, Mr. GUO Lijun, Mr. SULLIVAN Kenneth Marc and Mr. MA Xiangjie; the non-executive Director is Mr. JIAO Shuge; and the independent non-executive Directors are Mr. HUANG Ming, Mr. LEE Conway Kong Wai and Mr. LAU, Jin Tin Don.
- 4 -
Attachments
- Original document
- Permalink
Disclaimer
WH Group Ltd. published this content on 30 October 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 30 October 2018 09:01:04 UTC