PowerPoint Presentationwebcast.archive.wisdomir.com/files/10230/l1/... · 2020. 8. 11. · USD/Kg...

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2020 Interim Results

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• This presentation and the accompanying slides (the “Presentation”) have been prepared by WH Group Limited ("WH Group " or the "Company") solely for

information purposes.

• This Presentation does not constitute or form part of and should not be construed as, an offer or invitation to acquire, purchase or subscribe for any securities of

the Company nor is it calculated to invite any such offer or invitation nor shall it constitute any offer or sale of such securities in any jurisdiction. No part of this

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obligation to provide the recipient of this Presentation with any such amended or updated information or correct any inaccuracies herein unless otherwise required

by the Rules Governing The Listing Of Securities On The Stock Exchange Of Hong Kong Limited or any applicable law.

• This Presentation may not be all-inclusive and may not contain all of the information that you may consider material. Neither the Company nor any of its affiliates or

representatives make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein or any other

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• This Presentation contains statements that reflect the Company's intentions, beliefs or expectations about the future or future events (the "forward- looking

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uncertainties and other factors beyond the Company's control, and accordingly, actual results may differ materially from these forward-looking statements. You

should not take any forward-looking statements contained in this Presentation regarding past trends or activities as a representation that such trends or activities

will continue in the future. The Company expressly disclaims any obligation to update these forward-looking statements.

Disclaimer

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01

02

03

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1H 2020 Financial Summary

1H 2020 Business Review

Strategies and Outlook

Appendix

Table of Contents

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1H 2020 Financial Summary

4

.

1H2020 (1) 1H2019(1) Y-o-Y Change

Hogs produced（000 heads） 10,400 10,582 -1.7%

Hogs processed（000 heads） 22,407 28,233 -20.6%

Packaged meats sold（000 metric tons) 1,575 1,610 -2.2%

US$ Million 1H2020 (1) 1H2019(1) Y-o-Y Change

Revenue 12,481 11,127 12.2%

EBITDA (1) 1,236 1,032 19.8%

Operating profit 925 765 20.9%

Profit before Tax(1) 848 685 23.8%

Profit for the period(1) 675 565 19.6%

Profit attributable to owners of the Company (1) 550 463 18.8%

Basic earnings per share（US$ cents）(1) 3.73 3.15 18.4%

Interim dividend per share (HK$ ) 0.05 0.05 -

Consolidated Financials Overview

Key Operating Data

Key Financial Data

Note：1. Before biological asset fair value adjustments

5

China41.8%

U.S.49.0%

Europe 9.2%

Packaged Meats46.8%Fresh Pork

44.0%

Hog Production 5.1%

Others and Corporate 4.1%

China59.5%

U.S.29.8%

Europe 10.7%

PackagedMeats

Presh Pork HogProduction

Others TotalOperating

Profit

%

% %

%

Total

12,481

Segment Revenue and Operating Profit

1H 2020 Revenue by Business Segments (1)

1H 2020 Revenue by Region(1) 1H 2020 Operating Profit by Region (2)

1H 2020 Operating Profit by Business Segments(2)

US$ million US$ million


Total

925

Note：1. External sales2. Before biological fair value adjustments

Total

12,481

75.0%

23.8%5.0% 100%

(3.8%)

6

399

1,219

1H2019 1H20208.1%

42 59

178 144

5231

1H2019 1H2020

China U.S. Europe

94 94 94 94 94

236

489505

377

594

2015FY 2016FY 2017FY 2018FY 2019FY 1H2020

%

Cash Flows and Capital Structure

Interest-bearing Liabilities / Total Equity

Operating Cash Flow Capital Expenditures


Dividend payout US$ million

Total：234Total： 272

47% of earnings

during the year (1) 40% of earnings

during the year (1)

30% of earnings

during the year (1)

41% of earnings

during the year (1)

Note ：1，total dividend payout / profit attributable to owners of the company after biological fair value adjustments

US$ million45% of earningsduring the year (1)

58.4%

40.9% 38.9% 37.1%32.7% 31.8%

31/12/2015 31/12/2016 31/12/2017 31/12/2018 31/12/2019 30/6/2020

3,914

2,8783,198 3,119 3,092 3,114

1H 2020 Business Review

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Business Environment

• In the first half of 2020, hog prices in China remained high. The

average hog price was RMB33.95 per kilogram (“kg”), an increase of

137.0% year-on-year.

• In the U.S., the average hog price during the first half of 2020 was

US$0.95 per kg, a decrease of 17.4% year-on-year.

• The number of slaughtered hogs in China fell 19.9% to 251

million heads in the first half of 2020.

• The number of slaughtered hogs in the U.S. increased by 0.5%

to 63.18 million heads in the first half of 2020 and decreased by

5.9% to 28.96 million heads in the second quarter.

USD/Kg RMB/Kg

Hog Prices in China and U.S.Number of Slaughtered Hogs in China and U.S.

Million heads

Source: Chicago Mercantile Exchange and Ministry of Agriculture of the People’s Republic of ChinaSource: National Bureau of Statistics of China and USDA

19,983

13,439

16,157

19,80318,842

12,504

9,632

13,441 13,12911,974

3,0892,966 3,020

3,256 3,2093,077 3,140

3,4383,422

2,896

2000

2500

3000

3500

4000

4500

5000

5500

6000

6500

7000

0

5,000

10,000

15,000

20,000

25,000China U.S.

0

5

10

15

20

25

30

35

40

0

1

2

3

4

5

6

2018/1 2018/7 2019/1 2019/7 2020/1

U.S. China

In the first half of 2020, the COVID-19 pandemic heavily impacted the global economy. In China, as the epidemic was brought under

control in the second quarter, our business operations quickly resumed and continued to improve with results improving substantially

year-on-year. In the U.S., the virus spread rapidly in the second quarter, leading to labor shortages, production restrictions,

increased costs and drops in sales, which put pressure on our operations and caused a significant decline in our performance.

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Proactively responded to COVID-19 by adopting

effective measures to protect the safety of our

employees and maintain stable operations

Eying opportunities in the breeding sector to enhance

the competitiveness of our core packaged meats

business segment

Reduced frozen pork inventories to improve profits,

increased imports to fill the supply gap in the

domestic market

Profitability of packaged meats increased significantly

thanks to price adjustments, remarkable results seen from

product mix optimization and new product launches

Resumed Operations and Production in a Timely Manner,

Revenue and Profit Hit Record Highs

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Operating Profit and

Margin (1) Packaged Meats(2) Fresh Pork (2) Hog Production (2)

US$ million US$ million US$ million US$ million

Note：1. Percentage marked in white on the bars represent Operating Profit Margin = operating profit / external sales2. Percentage marked in white on the bars represent Operating Profit Margin = operating profit / internal and external sales

-7-2

1H2019 1H2020

125

102

5.6%

3.0%

1H2019 1H2020

288

417

16.7%

21.1%

1H2019 1H2020

425

550

11.3%10.5%

1H2019 1H2020

Operating Profit

Operating Profit Margin

Resumed Operations and Production in a Timely Manner,

Revenue and Profit Hit Record Highs

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U.S. Operations Step Up Efforts to Prevent COVID-19

European Operations Showing Strong Momentum

As the health and safety of our employees remains our

top priority, we stepped up efforts to prevent COVID-19,

recording approximately US$400 million in costs and

charges related to COVID-19

Adopted effective hedging strategies to ease the impact

of low hog prices on profitability

Proactively realigned product mix and business strategy

to improve the profitability of fresh pork business

European operations benefited from favorable market

conditions and improved management, profits of hog

production business increased significantly, fresh pork

business continued to improve, profits of packaged meats

business continued to grow

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Proactively Realigned Product Mix and Business Strategy to

Improve the Profitability of Fresh Pork Business


Margin (1) Packaged Meats(2) Fresh Pork (2) Hog Production (2)



294276

4.6% 4.5%

1H2019 1H2020

Operating Profit


446

243

11.9%

7.1%

1H2019 1H2020 -15

116

-0.4%

3.2%

1H2019 1H2020

-62

-20-4.1%

-1.2%

1H2019 1H2020

13

Hog Production (2)

Profits of Hog Production Business Increased Significantly, Fresh Pork

Business Continued to Improve, Profits of Packaged Meats Business

Continued to Grow


Margin (1) Packaged Meats(2) Fresh Pork (2)



46

99

4.9%

8.5%

1H2019 1H2020

Operating Profit


27

34

6.2% 7.0%

1H2019 1H2020-7

2

-1.2% 0.3%

1H2019 1H2020

24

68

7.4%

19.1%

1H2019 1H2020

14


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• Committed to our strategy of launching new products,optimizing our product portfolio, increasing sales andimproving sales management to consolidate our marketposition;

• Viewing the integration of the meat industry as anopportunity to increase market share of the fresh porkbusiness;

• Further expand meat imports to enhance marketcompetitiveness;

• Further enhance our integrated business model, move towards the upstream of the value chain by developing the hog production business and expanding the poultry business.

In China


In U.S. and Europe

• Adapt to changes in the business environment, andproactively adjust strategies

• Leverage the advantages of the integrated business model;

• Realign the product mix in the packaged meats businessaccording to changes in sales channels to improveprofitability;

• Promote technical transformation of the fresh pork businessto improve operational efficiency;

• Stabilize the profitability of the hog production business andimprove the ability to mitigate the impact of market volatilitythrough hedging;

• Enhance the scale and profitability of the Europeanbusiness through integration and utilization of theproduction capacity of the newly acquired businesses.

▪ Looking ahead, the situation surrounding COVID-19 remains grim, and there are still many uncertainties ahead in

terms of the global economic trends, geopolitical conflicts, trade tensions, and ASF, which will heavily impact global

economy and the industry.

▪ WH Group will take effective measures to protect the health and safety of our employees and maintain stable

operations. The Group is committed to giving full play to its global competitive advantages, seizing opportunities that

result from global changes and industry integration, which will enable us to prevent risk, consolidate our leading

position in the industry, and maintain the Group’s sustainable development.

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Appendix

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Low temperature products

American style products / Hunter Sausage

Smithfield-branded products

Shuanghui thick cut bacon

Marco Polo low temperature series

Product Innovation

High temperature products

Shuanghui Spicy Sausage

Shuanghui cooking sausage

Coobi cod sausage

Shuanghui new starch-free ham Sausage: King of the King

Leisure Products：Snack sausage / Hot spicy sausage

Chinese Style Products：

Deli/ Preserved meat / Braised vegetarian series

Plant-based protein products

“SoyFit” plant-based meat

Plant-based sausage

Plant-based burger steak

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Innovative Marketing Approach

Accelerating video livestream marketing activities to

promote new products and enhance brand influence

• Our video livestreaming activities generated over one

hundred million views in total. Sales volume reached 160

metric tons, and sales revenue exceeded RMB 7 million;

• During the live streaming of the “T-mall 517 Food Festival”,

with the recommendation of top KOL Viya, Shuanghui Spicy

Sausages were sold out in 3 seconds after they went online.

The online flagship store traffic surged by 398,000, with sales

volume exceeding 100 metric tons and sales revenue

exceeding RMB 3 million.

Rejuvenate the brand by a

marketing campaign on TikTok

• Initiated the #CallMeHuoxuanfeng

Challenge on TikTok and became

a tile sponsor of an offline event

organized by TikTok – the closing

ceremony of the “in City” happy life

festival.

• The challenge generated 880

million views on TikTok, which

resulted in close engagement with

young consumers.

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Product Innovation

Wholesome Portable Meals

Premium Deli Franks

All Natural

Breakfast Patties

Pulled Pork

Snack Trays

Smoked Ham

Deli Pre-Slice Meats and Cheeses

Breakfast Sausage

20

Product Innovation

Hot Dog

Dried Sausage Chicken Products

Mini Burgers

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Investor RelationsTel: (852) 2922 0736

Email: [email protected]
mailto:[email protected]

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