WH Group Ltd., the parent company of Smithfield Foods, announced a spin-off of Smithfield’s US and Mexico operations on July 14, 2024. Post spin-off, WH Group will focus on its operations in China and Europe, catering to various meat products through renowned brands. On the other hand, Smithfield will continue to overlook the US and Mexico businesses catering to similar segments. The board of directors submitted a proposed spin-off application to the Hong Kong Stock Exchange, expected to be listed on either the NYSE or NASDAQ.
WH Group, the largest pork company globally, has been facing declining volumes and sales. The acquisition of Smithfield in 2013 solidified its position but has been impacted by lower revenue in the US and China regions. The spin-off aims to rejuvenate the US business, leveraging Smithfield’s strong market presence. WH Group currently trades at a discount compared to its peers, and the separation could unlock its fair value, with Smithfield and Shuanghui getting individually valued.
WH Group has operations in China, the US, and Europe, contributing to its revenue from various segments like Packaged Meats, Fresh Pork, and other ancillary businesses. China accounted for a third of the revenue, the US and Mexico contributed more than half, and Europe made up the rest. The company aims to improve its product portfolio and expand its market presence in different regions through strategic initiatives.
In 2023, WH Group faced challenges in its Packaged Meats and Pork segments, with declining sales volumes and revenues in both China and the US. The company continues to focus on introducing new products and channels to combat volume declines. The separation of Smithfield is expected to help WH Group navigate the challenging market conditions and capitalize on the recovery expected in the US business in the near future.
Total revenues for WH Group fell in 1Q24, driven by decreased sales volumes in Packaged Meats and Pork. However, the EBITDA and net income saw growth, indicating potential for recovery in the coming quarters. In FY23, WH Group witnessed a decline in total revenues, EBITDA, and net income, primarily due to challenges in the US Pork operations. The company aims to improve its financial performance post the spin-off of Smithfield.
WH Group’s subsidiary Smithfield Foods is a leading pork processing and hog production company offering a diverse range of meat products under various brand names. Post spin-off, Smithfield will remain a subsidiary of WH Group, focusing on the US and Mexico markets. WH Group, headquartered in Hong Kong, operates globally with a workforce of over 100,000 employees, providing a wide range of meat products and ancillary services across different regions.
