WH Group Ltd., the owner of U.S.-based Smithfield Foods, reported an increase in profits during the first quarter. The growth in profits was mainly driven by improvements in its U.S. operations, which offset a decline in China. Operating profit for the three months ended March 31 rose by 37% to $501 million, despite a decrease in revenue and sales volumes, according to a statement from the Hong Kong-based company.
Although shares initially rose by 3.5%, they later receded due to concerns about macro-economic challenges that may impact consumer confidence and consumption demand. However, WH Group’s core business is expected to remain resilient for the remainder of the year as it continues to optimize its portfolio of packaged meats and adjust production levels based on market dynamics.
Higher pork prices and a series of reform measures helped WH Group reduce losses related to hog farming, slaughtering, and sales of fresh and frozen pork in the U.S. and Mexico. The company also reported a profit of $288 million from the sale of packaged meats in the region, indicating a positive turnaround for its North American operation. This improvement is seen as a positive sign for competitors such as Tyson Foods Inc. and JBS SA, who are set to report earnings next month.