万洲国际(00288) - 2025 - 中期业绩

Performance Highlights The company reported an 8.9% revenue growth and 10.4% operating profit increase, primarily driven by strong pork sales offsetting a decline in meat product volume Key Performance Indicators for the Six Months Ended June 30, 2025 | Indicator | H1 2025 | H1 2024 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Data | | | | | Meat Products Sales Volume (Thousand Metric Tons) | 1,451 | 1,501 | -3.3% | | Pork Sales Volume (Thousand Metric Tons) | 1,960 | 1,823 | +7.5% | | Financial Data (Million USD) | | | | | Revenue | 13,387 | 12,293 | +8.9% | | Operating Profit | 1,259 | 1,140 | +10.4% | | Profit Attributable to Owners (before biological fair value adjustment) | 725 | 694 | +4.5% | | Profit Attributable to Owners (after biological fair value adjustment) | 788 | 784 | +0.5% | | Per Share Data | | | | | Basic Earnings Per Share (Cents, before adjustment) | 5.65 | 5.41 | +4.4% | | Basic Earnings Per Share (Cents, after adjustment) | 6.14 | 6.11 | +0.5% | | Interim Dividend Per Share (HKD) | 0.20 | 0.10 | +100% | - During the reporting period, the company's overall revenue grew by 8.9%, and operating profit increased by 10.4%. Despite a 3.3% decrease in core meat product sales volume, pork sales volume achieved a 7.5% increase, becoming the main driver of performance[3][4][5] Management Discussion and Analysis This section analyzes the company's operational performance, market dynamics, and strategic initiatives across its global segments, highlighting key drivers and challenges Segment Performance Overview (Million USD) | Segment | Revenue (H1 2025) | Revenue (H1 2024) | Revenue Change | Operating Profit (H1 2025) | Operating Profit (H1 2024) | Operating Profit Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Meat Products | 6,640 | 6,491 | +2.3% | 1,047 | 1,137 | -7.9% | | Pork | 5,623 | 4,926 | +14.1% | 255 | 95 | +168.4% | | Other | 1,124 | 876 | +28.3% | (43) | (92) | N/A | | Total | 13,387 | 12,293 | +8.9% | 1,259 | 1,140 | +10.4% | - Meat products business remains the group's core, contributing 83.2% of operating profit and 49.6% of revenue[15] Industry Overview The group's three major markets—China, the US, and Europe—showed divergent trends, influenced by supply, demand, and trade dynamics - The group's global operations span China, North America, and Europe, with North America contributing the largest share of revenue (55.2%) and operating profit (53.6%) during the period[8] China Market China's market saw ample hog supply and limited consumption growth, leading to a slight decline in hog prices despite increased pork imports - China's market maintained ample hog supply but limited consumption growth, resulting in a modest 0.8% year-on-year decrease in average hog prices to RMB 15.5 per kilogram[9] - Despite complex international trade conditions, China's total imports of pork and offal increased by 3.4% to 1.15 million metric tons during the review period[10] US Market The US market experienced rising hog prices and pork values due to tighter supply and strong demand, which challenged slaughtering operations and reduced exports - Tightened pork supply and firm prices for other meats fueled strong US domestic pork demand, driving average hog prices up 8.7% and average pork values up 4.5% year-on-year[11] - Pork value growth lagged hog price increases, creating an unfavorable operating environment for slaughtering companies, while high prices and tariffs led to a 4.0% year-on-year decrease in pork exports[11] Europe Market Europe saw increased pork production and trade disruptions, leading to an 8.3% decline in average carcass prices, which boosted export competitiveness - Total EU pork production increased by 1.2% year-on-year, with increased supply and trade disruptions from foot-and-mouth disease in some regions driving an 8.3% decrease in average EU carcass prices[13] - Falling prices enhanced the export competitiveness of pork products, leading to a 1.9% year-on-year increase in total EU exports, including a 6.0% rise in exports to China[13] Operating Performance The group's overall revenue grew by 8.9% to $13.387 billion, and operating profit increased by 10.4% to $1.259 billion, primarily driven by strong pork business performance Meat Products Segment The Meat Products segment's operating profit declined by 7.9% to $1.047 billion, primarily due to weak demand in China and increased raw material costs in North America - Meat Products segment operating profit decreased by 7.9% to $1.047 billion, primarily due to declining sales and profits in China from weak demand, and squeezed margins in North America as raw material costs outpaced selling price increases[18] Meat Products Segment Performance by Region (Million USD) | Region | Revenue (H1 2025) | Revenue Change | Operating Profit (H1 2025) | Operating Profit Change | | :--- | :--- | :--- | :--- | :--- | | China | 1,531 | -9.8% | 411 | -10.7% | | North America | 4,102 | +4.0% | 569 | -7.3% | | Europe | 1,007 | +18.3% | 67 | +6.3% | - European operations showed strong performance, with revenue and operating profit growing by 18.3% and 6.3% respectively, driven by the acquisition of Argal and effective pricing discipline[17][18] Pork Segment The Pork segment's operating profit surged by 168.4% to $255 million, mainly driven by the turnaround of North American hog farming operations - Pork segment operating profit surged by 168.4% to $255 million, primarily driven by the turnaround of North American hog farming operations to profitability[20] Pork Segment Performance by Region (Million USD) | Region | Revenue (H1 2025) | Revenue Change | Operating Profit (H1 2025) | Operating Profit Change | | :--- | :--- | :--- | :--- | :--- | | China | 1,795 | +8.4% | 28 | — | | North America | 3,279 | +21.0% | 163 | N/A (Loss of $4 million in prior period) | | Europe | 549 | -2.0% | 64 | -9.9% | - Global hog slaughter volume increased by 6.2% to 23.67 million heads year-on-year, and external pork sales grew by 7.5%, collectively driving a 14.1% increase in revenue[19][20] Other Segments Other segments' revenue increased by 28.3% to $1.124 billion, contributing positively to profit, primarily due to the poultry business returning to profitability - Other business revenue grew by 28.3% to $1.124 billion and contributed to profitability, primarily due to the poultry business returning to profit[21] - Poultry business slaughter volume increased by 11.8% to 182 million birds, with external sales up 13.0%, forming a key part of the group's protein diversification strategy[21] Significant Corporate Developments The most significant development was the successful spin-off and Nasdaq listing of Smithfield, generating $534 million in net cash proceeds and a subsequent $325 million special dividend to shareholders Smithfield's Independent Listing on Nasdaq In January 2025, the group successfully spun off its North American business, Smithfield, for independent listing on Nasdaq under the ticker 'SFD' - In January 2025, the group spun off its North American business, Smithfield, for independent listing on Nasdaq under the ticker 'SFD'[22] - The group received approximately $534 million in net cash proceeds from selling a portion of Smithfield's shares[22] - Following the listing, the group distributed approximately $325 million in total special cash and in-specie dividends to shareholders[22] Financial Position and Capital Management The group maintained strong liquidity with $1.832 billion in cash and $6.197 billion in unused bank facilities, while managing increased debt and stable financial costs, retaining investment-grade credit ratings Liquidity The group maintained robust liquidity with $1.832 billion in cash and $6.197 billion in unused bank facilities, with a stable current ratio of 1.9 times Liquidity Position (Million USD) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and Bank Balances | 1,832 | 2,055 | | Unused Bank Facilities | 6,197 | 5,358 | | Current Ratio | 1.9x | 1.9x | Credit Profile The group maintained strong investment-grade credit ratings with stable outlooks from Fitch (BBB+), S&P Global (BBB), and Moody's (Baa2) - The group maintained strong investment-grade credit ratings with stable outlooks: - Fitch: BBB+ - S&P Global: BBB - Moody's: Baa2[26] Debt Profile Total outstanding loans increased to $3.875 billion, with 99.9% being unsecured, and no defaults occurred during the period Outstanding Loan Analysis (Million USD) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | By Nature | | | | Senior Unsecured Notes | 1,984 | 1,982 | | Bank Loans | 1,885 | 1,318 | | Total | 3,875 | 3,310 | | By Region | | | | North America | 1,984 | 1,983 | | China | 1,722 | 1,099 | | Europe | 169 | 228 | - As of June 30, 2025, 99.9% of the group's loans were unsecured, with no defaults occurring during the period[29] Leverage Ratios Leverage ratios increased, with the net debt-to-equity ratio rising from 11.0% to 17.0%, reflecting the increase in total loans Changes in Leverage Ratios | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Debt-to-Equity Ratio | 32.2% | 29.1% | | Net Debt-to-Equity Ratio | 17.0% | 11.0% | | Debt-to-EBITDA Ratio | 1.2x | 1.1x | | Net Debt-to-EBITDA Ratio | 0.6x | 0.4x | Financial Costs Despite an increase in total loans, financial costs remained stable at $74 million due to a decrease in the average interest rate on outstanding loans to 2.74% - Despite an increase in total loans, financial costs remained stable at $74 million due to a decrease in applicable loan interest rates, with the average interest rate on outstanding loans falling from 2.95% to 2.74%[32] Human Resources As of the reporting period end, the group employed approximately 100,000 people globally, with total compensation expenses rising by 6.1% to $2.131 billion due to wage inflation and share-based compensation - As of June 30, 2025, the group employed approximately 100,000 employees globally, with 46,000 in China, 35,000 in North America, and 19,000 in Europe[33] - Total compensation expenses for the period were $2.131 billion, a 6.1% year-on-year increase, primarily influenced by global wage inflation and share-based compensation[34] Biological Assets The fair value of the group's biological assets was $1.343 billion, with a net gain of $62 million from fair value adjustments, lower than the prior year's gain Biological Assets Quantity and Value | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Hogs (Ten Thousand Heads) | 1,080 | 1,260 (Estimated) | | Total Poultry (Ten Thousand Birds) | 3,270 | 2,170 (Estimated) | | Fair Value (Million USD) | 1,343 | 1,441 | - During the reporting period, the net impact of biological fair value adjustments on profit or loss was a gain of $62 million, compared to a gain of $96 million in the prior period[35] Major Investments and Restructuring Activities The group undertook strategic initiatives including forming US joint ventures for hog supply, restructuring US western operations, and acquiring a controlling stake in Spain's Argal to bolster European growth - Established two joint ventures in the US, Murphy Farms and VisionAg Hog Production, to secure a stable annual supply of approximately 3.8 million hogs[36][37] - Continued restructuring of US western operations to address persistently rising operating costs in certain regions[38] - Completed the acquisition of a 50.1% equity stake in Spanish meat product producer Argal, aiming to establish it as the group's growth platform in Spain and Europe[41] Capital Expenditures Total capital expenditures for the period were $290 million, a decrease from $349 million in the prior year, with investments focused on production facilities in China, North America, and Europe Capital Expenditures by Region (Million USD) | Region | H1 2025 | H1 2024 | | :--- | :--- | :--- | | China | 73 | 117 | | North America | 158 | 173 | | Europe | 59 | 59 | | Total | 290 | 349 | - Capital expenditures were primarily allocated to the construction, renovation, and modernization of production plants and related facilities[43][46] Key Risks and Their Management The group manages risks such as commodity price volatility, currency and interest rate fluctuations, and contingent liabilities, including ongoing antitrust litigation in the US Commodity Price Risk The group mitigates commodity price volatility for hogs, pork, and corn through effective inventory management, cost pass-through, overseas imports, and hedging in active markets - The group mitigates the impact of price fluctuations in commodities like hogs, pork, and corn through effective inventory management, cost pass-through, overseas imports, and hedging in active markets[48] Currency and Interest Rate Risk The group manages currency risk by settling in local currencies and hedging significant exposures, while optimizing its debt portfolio with 91.8% fixed-rate loans to manage interest rate risk - The group mitigates currency risk by settling in local currencies across regions and actively monitoring and hedging significant foreign exchange exposures, while managing interest rate risk by optimizing its debt portfolio, with approximately 91.8% of loans at fixed rates by period-end[49] Contingent Liabilities Smithfield faces ongoing antitrust lawsuits in the US, having settled collective claims for $194 million, with 22 individual cases still pending active defense - Smithfield faces antitrust lawsuits in the US, having paid approximately $194 million to settle all collective claims, with 22 individual cases still pending and the company intending to actively defend against them[51] Sustainability The group integrates sustainability into its governance through a board-level ESG committee, maintaining an A+ rating on the Hang Seng Corporate Sustainability Index and a BBB ESG rating from MSCI - The group has a board-level Environmental, Social, and Governance (ESG) Committee responsible for setting sustainability goals and guiding development strategies[52] - The company remains a constituent of the Hang Seng Corporate Sustainability Index with an A+ rating, and MSCI maintains its BBB ESG rating[53] Outlook Management plans to focus on core meat products, drive transformation in China, maintain profitability in the US, expand in Europe, and enhance pork business efficiency, aiming for stable performance and shareholder returns amidst global uncertainties - Future strategic priorities include product and channel transformation in China, maintaining high profitability in the US, scaling up and enhancing profit contribution in Europe, and improving hog farming metrics and processing efficiency for the pork business[55] Condensed Consolidated Financial Statements This section presents the group's condensed consolidated financial statements, including the income statement, balance sheet, and cash flow statement, for the reporting period Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The group reported revenue of $13.387 billion, a profit for the period of $919 million, and profit attributable to owners of $788 million, resulting in basic earnings per share of 6.14 cents Condensed Consolidated Statement of Financial Position As of June 30, 2025, total assets were $20.846 billion, total liabilities were $8.795 billion, and net assets were $12.051 billion, with a current ratio of 1.9 times Condensed Consolidated Statement of Cash Flows Net cash generated from operating activities was $767 million, while investing and financing activities resulted in net cash outflows of $829 million and $147 million respectively, leading to a period-end cash balance of $1.832 billion Notes to the Condensed Interim Consolidated Financial Information This section provides detailed notes to the condensed interim consolidated financial information, offering further insights into segment performance and dividend declarations Segment Information This note details revenue and profit data by business segment (Meat Products, Pork, Other) and region (China, North America, Europe), highlighting North America as the largest contributor and Pork as the primary driver of profit growth Segment Revenue and Profit for H1 2025 (Million USD) | Segment | Region | External Revenue | Reportable Segment Profit | | :--- | :--- | :--- | :--- | | Meat Products | | 6,640 | 1,047 | | | China | 1,531 | 411 | | | North America | 4,102 | 569 | | | Europe | 1,007 | 67 | | Pork | | 5,623 | 255 | | | China | 1,795 | 28 | | | North America | 3,279 | 163 | | | Europe | 549 | 64 | | Other | | 1,124 | (43) | Dividends The board proposed an interim dividend of HKD 0.20 per share for the six months ended June 30, 2025, double the prior year's dividend, payable around September 30, 2025 - The Board proposed an interim dividend of HKD 0.20 per share for 2025, double the HKD 0.10 per share paid in the prior period of 2024[78] Other Information This section covers additional corporate governance and financial details, including the Audit Committee's review and the interim dividend announcement Audit Committee The Audit Committee, comprising three independent non-executive directors, reviewed the group's interim results, internal controls, and financial reporting matters - The company's Audit Committee, composed of three independent non-executive directors, reviewed the interim results for the period in conjunction with management[95] Interim Dividend The Board proposed an interim dividend of HKD 0.20 per share, totaling approximately $327 million, payable around September 30, 2025, with relevant record date arrangements announced - The Board proposed an interim dividend of HKD 0.20 per share, totaling approximately $327 million, expected to be paid around September 30, 2025[99]