WH GROUP LIMITED 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萬洲國際有限公司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 288) ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED DECEMBER 31, 2016 HIGHLIGHTS Key operating data 2016 2015Hogs produced (million heads) 19.2 19.1
Hogs processed (million heads) 49.3 48.3
Packaged meat products sold (million metric tons) 3.2 3.2
2016 2015 Results before biological fair value adjustmentsUS$ million
Results after biological fair value adjustmentsResults before
biological fair value adjustments
US$ million
Results after biological fair value adjustments
Key financial data | (unless otherwise stated) | (unless otherwise stated) | ||
Turnover | 21,534 | 21,534 | 21,209 | 21,209 |
EBITDA | 2,238 | 2,263 | 2,044 | 1,917 |
Operating profit Profit attributable to owners of the Company | 1,788 1,014 | 1,788 1,036 | 1,557 866 | 1,557 786 |
Basic earnings per share (US cents) | 7.42 | 7.58 | 6.34 | 5.75 |
Interim dividend per share (HK$) | 0.05 | 0.05 | - | - |
Final dividend per share (HK$) | 0.21 | 0.21 | 0.125 | 0.125 |
0.26 | 0.26 | 0.125 | 0.125 |
Turnover increased by 1.5%
Operating profit increased by 14.8%
Profit attributable to owners of the Company, before biological fair value adjustments, increased by 17.1%
The board (the "Board") of directors (the "Directors") of WH Group Limited (the "Company") is pleased to announce the consolidated results of the Company and its subsidiaries (the "Group") for the year ended December 31, 2016.
The following discussion should be read in conjunction with the consolidated financial statements of the Group, including the related notes, set forth in this announcement.
BUSINESS REVIEW-
INDUSTRY OVERVIEW China
China is the largest pork producer and consumption market in the world and the market is expected to expand further. Generally, the growth of the pork industry in China is largely dependent on the pace of its economic growth, urbanisation and improvement of people's living standard. Nevertheless, the short term trend is impacted by the industry cycle. According to the National Bureau of Statistics of China, the total production of pork in 2016 was 53.0 million tons, a decrease of 3.4% as compared to last year.
The pork prices in China are reflections of the supply and demand of hogs in the market. In 2016, the average hog price in China was RMB18.6 (approximately US$2.8) per kilogram ("kg"), a surge of 22.1% from last year. The high hog prices in the first half of 2016 were primarily a result of the imbalance in supply. In the second half of 2016, supply gradually increased and prices decreased accordingly. The hog price in the last month of 2016 was RMB17.5 (approximately US$2.5) per kg, a decrease of 14.6% from the peak of this year in May of around RMB20.5 per kg.
The high hog prices suppressed the overall consumption of fresh pork and increased the demand for importation of pork from foreign countries. With reference to the statistics of the General Administration of Customs of the People's Republic of China, the total volume of imported pork in 2016 rose by 108.4% from prior year.
U.S.U.S. is the second largest producer of pork worldwide and the largest pork exporter globally. In contrast to the pork industry in China, the U.S. pork industry is relatively mature and concentrated.
Hog prices and pork values in the U.S. are driven by the supply and demand of its domestic and export markets. In 2016, overall animal protein production in the U.S. was up, in which pork rose 1.8%, chicken rose 1.6% and beef rose 6.4%. Such increases in production put pressure on the hog prices. The average hog price during the year of 2016 was US$1.1 per kg, a decrease of 7.6% over the last year.
On the other hand, pork prices held up better due to strong exports, in particular to China. According to United States Department of Agriculture ("USDA"), the total export volume of U.S. pork and pork products grew 8.2% during 2016, while the volume to China grew at a much higher rate of 78.3%.
Broadly speaking, fresh pork players in the U.S. benefited from lower hog prices and relatively stable pork values during 2016. Hog farmers and slaughtering plants with ractopamine-free production capacity and access to China market benefited most from such opportunity.
Hog prices in China and U.S. during 2015 and 2016USD/kg 3.5
China
United States
3.0
2.5
2.0
1.5
1.0
0.5
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2015 2016
Sources: Chicago Mercantile Exchange and Ministry of Agriculture of the People's Republic of China
-
RESULTS OF OPERATIONS
Our business primarily consists of three operating segments, namely packaged meats, fresh pork and hog production.
2016 2015 ChangeUS$ million %
Turnover(1)
- Packaged meats
11,074
11,240
(1.5)
- Fresh pork
9,178
8,591
6.8
- Hog production
844
990
(14.7)
- Others(2)
438
388
12.9
21,534
21,209
1.5
Operating profit
- Packaged meats
1,475
1,499
(1.6)
- Fresh pork
545
226
141.2
- Hog production
(40)
54
N/A
- Others(2)
(192)
(222)
N/A
1,788
1,557
14.8
Profit before taxation
1,703
1,302
30.8
Profit for the year
1,238
995
24.4
Notes:
Turnover refers to net external sales.
Others primarily includes sales of ancillary products and services, as well as certain corporate expenses.
The packaged meats segment has always been our core business. It accounted for 51.4% of the Group's turnover in 2016 (2015: 53.0%). Its contribution to the Group's operating profit was even higher at 82.5% in 2016 (2015: 96.3%).
Geographically speaking, our operation in China contributed 36.0% and 46.0% of the turnover and operating profit of the Group in 2016, respectively (2015: 33.4% and 52.1%). Contribution of our operation in the U.S. to the turnover and operating profit of the Group in 2016 were 57.4% and 49.7%, respectively (2015: 60.1% and 44.7%).
WH Group Ltd. published this content on 22 March 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 22 March 2017 08:54:13 UTC.
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