BEIJING (Reuters) - Chinese pork processing giant WH Group (OTC:WHGLY) Ltd on Monday reported a 7.2% rise in annual profit to $1.043 billion driven by higher sales in the United States and Europe.
Revenue at the group, which owns U.S.-based Smithfield Foods, the world's largest pork processor, grew 6.7% in 2021 to $27.29 billion, according to a company filing.
Profit before biological fair value adjustments rose after low hog prices reduced product costs in China while higher sales and a reduction in COVID-19 related expenses in the U.S. outweighed an increase in raw material costs, the company said.
WH Group reported a 1.3% rise in the sales of packaged meats, its core business, to 3.32 million tonnes in 2021.
Sales volume in China, however, dropped by 1.6% in a consumer market lacking growth momentum.
Hog prices in China plunged last year as farmers rebuilt herds after an epidemic of African swine fever but COVID-19 outbreaks dampened demand.
WH Group told reporters that Chinese hog prices would remain low in the first half of 2022 before rising in the second half. Most analysts expect prices to remain low this year.
Rising commodity prices and production costs would remain a challenge it said, with its import and export business also affected by the pandemic - one executive noted longer shipment cycles and customs processes and higher costs.
WH Group's China business Shuanghui Development reported a 22.2% fall in net profit to 4.87 billion yuan ($764.69 million) on lower hog and meat prices, and said profit from frozen products and pork imports had dropped considerably.
Shuanghui was recently forced to apologise after a local media investigation uncovered food safety issues at one of its plants.
WH Group last year removed executive director Wan Hongjian, chairman Wan Long's son, citing untrue allegations he made against the company.
($1 = 6.3686 Chinese yuan renminbi)