March 15, 2019 / 10:49 AM / 6 months ago

China pork giant WH Group posts 2018 net profit of $1.05 bln; Q4 profit falls 7 pct

BEIJING, March 15 (Reuters) - China’s WH Group said on Friday its fourth-quarter net profit fell 7 percent to $290 million, as low pig prices in China and the Sino-U.S. trade war hit the income of the world’s top pork producer.

The sharp decline, based on a comparison of nine-month and full-year numbers released on Friday, underlined challenges faced by pork producers around the world.

Net profit for 2018 came to $1.05 billion, WH Group said, down 4 percent from the previous year. Revenue rose 1 percent in 2018 to $22.61 billion, said the statement.

WH Group, which owns U.S.-based Smithfield Foods Inc, said average pork prices in the United States dropped 9 percent in 2018 due to higher supplies from an expanding slaughter sector.

Also, the China-U.S. trade war has hit pork shipments between the two countries. In April, China slapped a 25-percent import duty on most U.S. pork products in response to U.S. tariffs on Chinese steel and aluminium products.

Pork products were also included in a second round of tariffs of 25 percent introduced in July.

Speaking to reporters, WH Group chairman Wan Long said the group’s pork shipments from Smithfield Foods to Shuanghui, its Chinese business, fell 45 percent last year due to the trade dispute.

Lower pork prices in China due to an outbreak of severe African swine fever disease also hurt the competitiveness of U.S. exports, WH Group said.

China is battling a fast-spreading epidemic of African swine fever. The disease has now spread to 28 provinces and regions since the first outbreak in August last year.

The Ministry of Agriculture and Rural Affairs said on Friday that China’s pig herd slid 16.6 percent in February from the previous year due to African swine fever.

China made its biggest purchases of U.S. pork in nearly two years last week, U.S. Department of Agriculture data showed on Thursday, as Chinese hog prices surged higher.

Live hog prices in China hit a 14-month high this week as the disease, which is fatal to pigs, hurt local production.

Hong Kong-listed shares of WH Group are up more than 30 percent since the start of the year as the market expects higher pork prices in 2019 on reduced supplies.

The stock closed 4.56 percent at HK$7.8 ($0.99) per share on Friday.

($1 = 7.8495 Hong Kong dollars)

Reporting by Hallie Gu and Dominique Patton; Editing by Tom Hogue

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