WH Group (288) H1 2020 earnings summary

Executive summary

• H1 revenue rose 12% YoY to $12.481bn; EBITDA increased 19.8% to $1.236bn and profit attributable to owners rose 18.8% to $550m.

• China operations recovered in Q2, while COVID-related labor shortages, restrictions and costs sharply pressured U.S. performance; Europe delivered strong growth.

Financial highlights

• Operating profit was $925m, up 20.9% YoY; profit before tax was $848m, up 23.8%, and profit for the period was $675m, up 19.6%.

• Basic EPS was $0.0373; packaged meat sales were 1.575m tons, down 2.2% YoY.

• Slaughtered hogs totaled 10.4m, down 1.7%; hogs processed were 22.4m, down 20.6% YoY.

Outlook and guidance

• China packaged-meat profit per ton was expected to remain stable in H2, without a serious decline; the longer-term objective is to sustain more than CNY4,000 per ton and gradually grow sales.

• U.S. operations expected continued pressure in Q3, easing from Q2, with recovery momentum into Q4; COVID costs were expected to be lower in Q3 and further reduced in Q4.

• H2 China fresh-meat profit was expected to decline as frozen inventory and imports fell, partly offset by rising packaged-meat profit.

• Strategy priorities included new products and portfolio optimization in China, expanded imports, upstream hog and poultry development, and improved U.S./European efficiency and profitability.