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China's COFCO Meat reports loss as swine fever hits pig prices

China's COFCO Meat Holdings Ltd have posted a loss of around $90 million for 2018 after slumping hog prices hit its pig farming business.

26 March 2019, at 9:31am

Speaking to Reuters, the company, a subsidiary of Chinese state-owned grains-to-property conglomerate COFCO that produces pigs for sale as well as churning out its own meat, said the nation's hog supplies would likely be tight in 2019 and 2020 in the wake of the disease. Tighter supply would likely boost pig prices.

The firm said it saw a net loss of 627.7 million yuan ($93.58 million) for 2018, down from a profit of 451.6 million yuan the year before.

China has recorded 114 outbreaks of highly contagious African swine fever since the disease was first detected last August, many in the industry believe it is worse than officially reported.

Restrictions on transporting pigs from region to region meant that some areas initially had an oversupply of the animals, which in turn dragged on nationwide hog and pork prices. But widespread culling means that supply has been tightening this year.

COFCO Meat said it planned to expand hog production while upgrading biosecurity measures to combat swine fever, adding that larger companies were better placed to take such steps.

The firm slaughtered 2.55 million pigs in 2018, up 14.5 percent from the previous year, partly offsetting the impact from low hog prices.

It will also speed up construction of slaughtering facilities in northern China and promote branded pork.

"Despite low pig prices in 2018, high end pork prices remained strong," the company said in a stock exchange filing.

Meanwhile, the firm said its "pork imports division and fresh pork department will coordinate, and grab opportunities brought by African swine fever".

The firm's revenue for 2018 was 7.17 billion yuan, up three percent from 6.96 billion yuan in 2017, largely thanks to its growing beef import business.

COFCO Meat sold 38,000 tonnes of imported beef in 2018, up 81.7 percent from the year before, amid surging demand for foods such as steak and hamburgers.

COFCO Meat shares were down 4.43 percent by 0808 GMT.

($1 = 6.7078 Chinese yuan renminbi)