HONG KONG (Reuters) - WH Group Ltd, the world’s largest pork company, has boosted its U.S. exports to Japan, South Korea and Mexico to reduce the impact of the trade spat between Washington and Beijing, Chairman Wan Long said on Tuesday.
The comment was made at a briefing after the company, which also owns Smithfield Foods in the United States, warned in its first-half earnings its biggest challenge is the overabundance of meat in the United States and uncertainty over growing trade tensions between the United States and its trading partners.
“If the trade war ends soon, we won’t be impacted much, but if it lasts longer, we will speed up the adjustment (in exports),” Wan said.
Smithfield Chief Executive Kenneth Sullivan, speaking at the same briefing, said Smithfield’s pork shipments to South Korea jumped as much as 50 percent in the first six months of the year and those to China, the world’s largest consumer, fell by 20-30 percent. Sullivan also said the company had no plans to move into beef.
In April, China slapped a 25-percent import duty on most U.S. pork items in response to U.S. tariffs on Chinese steel and aluminum products. Pork products were also included in a second round of tariffs introduced in July.
The United States shipped $489 million in pork to China last year, and had the biggest share of import volumes in the first quarter of this year at about 117,000 tonnes, according to Chinese customs.
WH Group’s Chief financial officer Guo Lijun played down the impact of the trade row on WH Group’s Chinese business, saying the company does not to need to bring in much product from overseas because of the low domestic hog prices.
Ma Xiangjie, president of WH Group’s China business, Henan Shuanghui Investment and Development, forecast hog prices would continue to recover slowly this month, but would be likely to fall until the end of the year. Average prices for 2018 will be 14 yuan, he said.
WH Group also plans to curb hog production and continue to expand its packaged meat business, Guo said without giving further details.
The company has been trying to counter slowing Chinese pork demand and woo the expanding middle class of the world’s most populous nation, where consumers are embracing a more diverse meat diet.
WH Group’s Hong Kong-listed shares have fallen almost 40 percent since Beijing first threatened to hit U.S. pork imports with tariffs as the trade spat escalated between the world’s top two economies.
The stock hit HK$5.95 on Aug. 9, its lowest since March last year.
Reporting by Donny Kwok, Trista Shi and Anne Marie Roantree; Writing by Josephine Mason; Editing by Tom Hogue