WH Group’s overseas profits remain under pressure as Shuanghui’s packaged meat improvement cannot offset US weakness

Why will earnings pressure persist after the third quarter?

WH Group’s overall third-quarter operating profit was broadly in line with Goldman Sachs’ expectations, but regional performance was weak: adjusted operating profit fell 53% year over year in the US and 39% in Europe. Shuanghui’s operating profit fell about 13% year over year, in line with Goldman Sachs’ forecast.
The US is an important source of fourth-quarter profit for the group. Goldman Sachs expects WH Group’s operating profit to fall 38% year over year in the fourth quarter and 19% for the full year, with the year-over-year decline narrowing in 2027. The estimate assumes a 54% fourth-quarter decline in the US business and a 3% decline in China.
The group’s third-quarter revenue was 6.984 billion US dollars, down 4% year over year and 5% below Goldman Sachs’ forecast. Operating profit excluding biological asset adjustments was 467 million US dollars, down 30% year over year and 3% below the bank’s forecast.

US fresh pork and hog production continue to face weak demand, narrower processing spreads and export competition. Industry processing margins fell about 28% quarter over quarter and 35% year over year in the third quarter, dropping below the level needed to cover costs. The updated fourth-quarter outlook also does not assume a significant seasonal recovery in either fresh pork or hog production.
US packaged meat remained relatively resilient: third-quarter volume, profit and margins all grew, and management expects operating profit to exceed 1 billion US dollars for a fifth consecutive year in 2026.
The European hog business lost 16 million US dollars in the first nine months of 2026, as average hog prices fell 20.4% year over year. Management expects capacity cuts to drive a modest recovery mainly in the second and third quarters of 2027, although weak demand and low prices in China and the US could limit price increases.

Shuanghui’s third-quarter packaged meat operating profit fell 10.5% year over year, and profit per tonne fell 10.7%. Management said pressure on profit came mainly from a higher share of low-margin, value-priced products and increased market spending. After adjusting the product mix and expenses, it expects fourth-quarter profit per tonne to improve from the third quarter but remain slightly below the prior-year level.
Lower pork and chicken costs and broadly stable selling prices support fourth-quarter profit. Sales through emerging channels grew more than 40% year over year in the first nine months of 2026 and accounted for over 25% of sales, but traditional channels continued to be affected by exits from some channels and performed slightly below expectations.
Excess hog supply continues to weigh on prices: China’s average hog price fell 25.5% year over year to 11.25 yuan per kilogram in the first nine months of 2026. Management expects prices to recover modestly by about 1 yuan per kilogram after industry losses drive production cuts in 2027, with the second half higher than the first. Within a certain range, low hog prices benefit slaughtering and fresh meat margins.

Citing weaker US hog production and fresh pork earnings, Goldman Sachs cut its WH Group operating profit forecasts for 2026–2028 by 11%–12% and lowered its 12-month price target from 10.10 Hong Kong dollars to 8.80 Hong Kong dollars, while maintaining its Buy rating.
Goldman Sachs cut its Shuanghui net profit forecasts for 2026–2028 by 1%–3%, reflecting lower fresh and frozen pork margins in 2027–2028. It lowered its price target from 25 yuan to 24 yuan and maintained its Neutral rating.
WH Group maintains a target of paying out at least 50% of annual net profit, and Goldman Sachs expects a dividend yield of 8.1% in 2026. Shuanghui did not pay an interim or first-nine-month cash dividend because meat, frozen pork and raw material inventories tied up working capital, but management maintains its policy of a high full-year payout ratio and plans to reduce inventories.