WH Group (288) Q1 2018 earnings summary

Executive summary

• Q1 revenue and owner-attributable profit increased YoY, while EBITDA and operating profit declined; weaker U.S. fresh pork was partly offset by China and packaged meat performance.

• Global operations processed 13.9 million hogs, up 7%; packaged meat external sales volume rose 4.1%.

Financial highlights

• Revenue was $5.62 billion, up 5.7% YoY; EBITDA was $516 million, down 4.1%, and operating profit was $379 million, down 9.3%.

• Profit attributable to owners was $249 million, up 22.1% YoY; basic EPS was $0.017, up 14.1%.

Outlook and guidance

• 2018 U.S. vertically integrated business remained on a growth budget, on a pre-tax basis; management was cautiously optimistic while noting market volatility and forecast uncertainty.

• U.S. packaged meats expected to have a strong year as lower raw-material costs flow through with a lag; bacon sales were expected to recover during the year.

• China packaged meat margins expected to improve over coming quarters; annual segment margin outlook was stable to higher, supported by portfolio adjustments.

• European acquisitions and restructuring targeted to triple profitability over four to five years from a 2016 base.