WH GROUP(HK:00288)2021-09-23 08:34Revenue and Profitability - WH Group reported a 6.8% increase in revenue, reaching $13.331 billion for the six months ended June 30, 2021, compared to $12.481 billion in the same period of 2020[9]. - The company sold 1,614 thousand tons of meat products, a 2.5% increase from 1,575 thousand tons in the previous year, and pork sales rose by 10.1% to 2,138 thousand tons from 1,942 thousand tons[8]. - Operating profit decreased slightly by 0.5%, amounting to $920 million, compared to $925 million in the same period last year[9]. - Profit attributable to owners of the company before biological fair value adjustments fell by 2.0% to $539 million, down from $550 million in the previous year[9]. - Total revenue for the company rose by 6.8% to $13.33 billion, with meat products revenue increasing by 10.8% to $6.46 billion and other revenue up by 43.0% to $728 million[15][18]. - Operating profit for meat products increased by 17.6% to $816 million, while pork segment operating profit dropped by 71.1% to $77 million due to narrowing price spreads[15][19]. - The company reported a profit of $14 million from its joint ventures in Mexico during the review period, a significant increase from $2 million in the comparative period[37]. - The company achieved a profit before tax of $977 million, which is a decrease of 8.5% from $1,065 million in the prior year[54]. - The net profit for the period was $770 million, down from $843 million in the same period last year, reflecting a decline of 8.7%[54]. Market Performance and Sales - The average price of live pigs in China during the reporting period was RMB 25.94 per kilogram (approximately $4.01), a decrease of 23.6% compared to the previous period[11]. - Total pork imports into China reached 2.95 million tons, with a year-on-year growth rate of 4.5%, down from nearly double in the previous period[11]. - The U.S. total animal protein production increased by 1.8%, with pork production rising by 1.7% during the reporting period[12]. - U.S. pork exports rose by 0.6% to 1.48 million tons, while exports to China fell by 18.4% due to significant price spread narrowing[13]. - Revenue from the U.S. meat products segment grew by 13.6% to $3.87 billion, driven by increased demand and pricing adjustments[17][18]. - European pork revenue increased by 10.8% to $573 million, supported by higher sales volume despite unfavorable pricing[19][20]. - The company's Chinese operations accounted for 40.9% of total revenue and 57.0% of operating profit during the review period[16]. Financial Position and Cash Flow - Cash and bank balances as of June 30, 2021, were $1.704 billion, up from $1.599 billion as of December 31, 2020[24]. - The current ratio as of June 30, 2021, was 1.7, down from 1.9 as of December 31, 2020, indicating a slight decrease in liquidity[24]. - Net cash inflow from operating activities was $272 million, a significant drop from $1.219 billion in the previous period, mainly due to increased inventory and accounts receivable[25]. - The company has unutilized bank financing of $5.635 billion as of June 30, 2021, compared to $5.032 billion as of December 31, 2020[24]. - As of June 30, 2021, the total outstanding bank borrowings amounted to $2.876 billion, an increase from $2.706 billion as of December 31, 2020[28]. - The debt-to-equity ratio was 25.1% and the net debt-to-equity ratio was 10.1% as of June 30, 2021, compared to 24.4% and 9.9% respectively as of December 31, 2020[31]. - The average interest rate on borrowings was 3.4% as of June 30, 2021, slightly down from 3.5% as of December 31, 2020[32]. - The company reported a total comprehensive income of $875 million for the six months ended June 30, 2021[58]. Capital Expenditures and Investments - Capital expenditures for the review period amounted to $321 million, an increase from $234 million in the same period last year, representing a 37.1% increase[39]. - In China, capital expenditures were $215 million, significantly higher than $59 million in the previous year, indicating a substantial investment in vertical integration facilities[40]. - In the United States, capital expenditures were $78 million, down from $144 million in the previous year, reflecting a decrease of 45.8%[39]. - The company completed the acquisition of 100% of Mecom Group on June 17, 2021, which is expected to enhance operational synergies in Central Europe[36]. - The fair value of identifiable assets and liabilities at the acquisition date was estimated at $54 million, including property, plant, and equipment valued at $52 million, and inventory valued at $15 million[94]. Risk Management and Sustainability - The company actively manages commodity price risks through strategic inventory management and hedging activities to mitigate the impact of price volatility[42]. - The company received an A+ rating in the Hang Seng Sustainable Development Corporate Index, highlighting its commitment to sustainability[47]. - The company is committed to providing high-quality products to consumers while maintaining its industry leadership and creating long-term value for shareholders, employees, and the community[48]. - The company is focused on risk management and has established a risk management committee to oversee these efforts[143]. Corporate Governance and Leadership - The company has adopted a code of conduct for directors' securities transactions, ensuring compliance with all standards during the review period[135]. - The board of directors has committed to maintaining good corporate governance practices and has complied with all applicable code provisions during the review period, with some exceptions noted[136]. - The roles of Chairman and CEO were held by the same individual during the review period, but the CEO position was separated on August 12, 2021, with a new CEO appointed[137]. - The company has made several board appointments and resignations, including the appointment of a new CEO and executive directors[138]. - The audit committee consists of three independent non-executive directors, including Mr. Li Gangwei (Chairman), Mr. Huang Ming, and Mr. Liu Zhantian[140].