News Asia
WH Group also suffers from African swine fever
It has been 1 year since the first outbreak of African swine fever was diagnosed in China and since then all provinces of the country have been infected with the virus. Now that WH Group has announced its half-year figures, it is also apparent what effect the disease has on large groups.
WH Group, the largest meat group in the world, announced its half-year figures at the beginning of this week. It shows that first half profit fell 16,9% to $463 million. According to the meat company, this is mainly due to the higher meat prices as a result of the outbreaks of African swine fever. The turnover of the company fell up to $11,1 billion. The operating result for the 'packaged meat' business, which accounts for 52,9% of turnover, decreased by 3,4%.
African swine fever
The outbreak of African swine fever has reduced China's pig population by 25,8% and sow numbers by 26,7%, official figures show. This means that fewer pigs are available, which is reflected in WH Group's operating result. "This will push our margin on the packaged meat business," the company said in a statement. In addition, demand from Chinese consumers has also decreased, as the image of pork has been damaged by the virus.
WH Group slaughtered 8,58 million animals in the first half of the year, which is 3,67% more than last year. This increase was possible because the group was able to benefit from relatively low pig prices at the beginning of the year. However, the pig price has now risen to a record high increased. The meat company itself also had to deal with an outbreak of African swine fever. In August 2018, a slaughter location of a subsidiary.
According to the latest figures from the Food and Agriculture Organization (FAO), about 5 million animals have died in Asia from African swine fever in the past year. That is more than 10% of the total pig population in China, Vietnam and Mongolia. The FAO adds that there are at least 26 million pig farms in China and about 50% of pork production comes from smallholder farmers. "Some farmers have lost the entire herd, so we expect it to years may take the country to recover from this," the FAO said.
trade war
The second problem for the meat company is the trade war between China and the United States. The United States currently has a surplus of pork, but the trade war (and thus higher import tariffs) has made importing from that country more difficult. Therefore, WH Group has reported that it is looking for pork from other countries: Europe, South America and Canada are the potential markets for the group.
In the first 6 months of the year, WH Group owes approximately 57,9% of sales to the United States. China had a share of 33,7% and Europe accounted for the rest (about 8,4%). However, the mainland operations are more profitable than the US operations (55% vs. 38,4%).
Kimberly Baker
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