WH Group (288) Q1 2020 earnings summary

Executive summary

• Q1 revenue rose 18.9% to $6.282B; EBITDA increased 51% to $711M and profit attributable to owners rose 80.1% to $353M, before biological asset fair value adjustments.

• Vertically integrated operations and geographic diversification supported results amid COVID-19, trade disputes, African swine fever and increased U.S. meat supply.

Financial highlights

• Revenue was $6.282B, up 18.9% YoY; EBITDA was $711M, up 51%; operating profit was $550M, up 61.3%.

• Profit for the period was $414M, up 65.8%; profit attributable to owners was $353M, up 80.1%; figures were before biological asset fair value adjustments.

• Hogs produced totaled 5.619M, up 2.9%; hogs processed totaled 12.333M, down 16.9%; packaged meat sales were 781,000 tons, down 1.1%.

Outlook and guidance

• China packaged meat sales began recovering in February and March; management expected no major issue with full-year growth, while slaughter volume was expected to recover gradually and declines to slow in H2.

• China packaged meat profitability was expected to remain high; no downward price adjustment was planned, with focus on product quality and promotion.

• U.S. hog production was expected to perform satisfactorily in Q2, subject to pandemic developments and hedging; subsequent packaged meat results depend on the pace of U.S. recovery.

• FY CapEx was expected to be close to announced project investment, possibly slightly higher; project spending to be phased over multiple periods.