WH-Group hit by stock declines
Chinese tariffs on American pork would have a limited impact on WH Group-owned Smithfield Foods, said Smithfield CEO Kenneth Sullivan on Tuesday, seeking to reassure investors days after news of the possible duties hit the parent’s stock. Shares in WH Group, owner of China’s biggest buyer of U.S. pork, have fallen nearly 12 percent since Thursday’s close, before Beijing said it may slap 25 percent tariffs on American pork. China said it would consider the move, along with other duties, to counter tough trade steps from Washington.
But China buys no more than 7 percent of Smithfield’s fresh pork output, Sullivan said in an analyst call after the company reported earnings late on Monday. “We’ll find markets, we ship to more than 40 countries,” said Sullivan. “We may very well ship to China even with an increased tariff,” he said. Investors have over-reacted, he said. WH Group shares fell more than 3 percent in Hong Kong on Tuesday following declines in excess of 4 percent in each of the previous two sessions.
The tariffs may even benefit the firm’s packaged meat business, which generates more than 70 percent of profits, by pressuring fresh pork prices in the U.S., Sullivan said. Industry experts expect the tariffs could force exporters to sell at lower prices to offset the duties. China buys mainly fresh pork from abroad and processes it at home.
WH Group’s profit rose 7.5 percent to $1.09 billion, driven by U.S. and Europe operations, but profits from the China business missed estimates, falling 1.9 percent to 4.3 billion yuan ($687 million).