In Q3 2024, Shuanghui Development reported a decline in processed meat sales through traditional offline channels, influenced by reduced consumer demand during the holiday season. Despite a rise in total sales volume and revenue, the dip in conventional channels was partially offset by new and digital sales avenues, which are still expanding. The company saw profitability improvements due to cost management and a refined product mix, achieving record profit margins. Fresh product sales also rose but faced profit compression due to stagnant pricing on certain items. To counterbalance these challenges, Shuanghui plans strategic investments focusing on product diversification, retail expansion, and bolstering digital and B2B operations.
Shuanghui Development (Shuanghui) recently reported a notable drop in traditional offline sales of processed meats for the third quarter of 2024. According to the company, while there was a year-over-year decrease in processed meat sales, this decline was less severe than in the second quarter. The primary reasons for this drop included sluggish consumer demand during this year’s dual holiday season, which reduced overall sales momentum, and a significant dip in sales across traditional channels. Although Shuanghui saw strong growth in new and online channels, these segments are still too small to offset traditional sales outlets’ decline.
For Q3 2024, Shuanghui’s total meat sales reached 839,000 tons, marking a quarter-over-quarter increase of 15.2% and a year-over-year rise of 0.6%. The company achieved a total revenue of CNY 16.4 billion (approximately USD 2.25 billion), representing a quarterly increase of 23% and an annual growth of 3.9%. Operating profit was recorded at CNY 1.97 billion (USD 270 million), with a significant quarterly increase of 38.4% and a marginal year-over-year rise of 0.7%.
In the processed meats segment, Shuanghui generated CNY 6.8 billion (USD 933 million) in revenue, which, although a 22% increase from the previous quarter, still reflected a 4% year-over-year decline. Profit from processed meats reached CNY 1.89 billion (USD 260 million), up 31.5% quarter-over-quarter and 7.9% year-over-year. Shuanghui attributes this profitability boost to cost management and adjustments in product structure, allowing the processed meats segment to achieve its highest-ever profit margins.
However, Shuanghui’s fresh products division reported CNY 8.5 billion (USD 1.17 billion) in revenue, a 26% quarterly and 5% annual increase, with operating profits at CNY 90 million (USD 12.35 million). According to AgriPost, despite these revenue gains, profit fell due to stagnant pricing in certain by-products and processed frozen items.
Strategic Measures to Drive Processed Meat Sales
Given the critical role of processed meats in Shuanghui’s profit base, the company outlined vital strategies to stimulate growth in this segment:
1. Product Portfolio Optimization: Increasing the availability of chilled and frozen options while maintaining warm offerings.
2. Expansion of Retail Footprint: Scaling up retail presence to improve end-market management.
3. Targeted Product Development: Enhancing the focus on growth categories like frozen and chilled products.
4. Strengthening Digital and B2B Sales Channels: To supplement weaknesses in traditional channels.
5. Increased Marketing Investment: Strategic campaigns to enhance competitiveness in key markets.
6. Advanced Digital Operations: Leveraging digital tools to optimize market strategy and improve operational efficiency.
Despite expectations of lower per-tone profits due to elevated marketing efforts, Shuanghui anticipates a year-over-year reduction in product costs for Q4 2024.
Year-to-Date Overview (January–September 2024)
In the first three quarters of 2024, Shuanghui reported a total meat product sales volume of 2.3488 million tons, down 4.93% from the previous year. The company’s cumulative revenue reached CNY 44.112 billion (USD 6.05 billion), a 4.82% decline, and net profit was CNY 3.804 billion (USD 522 million), down 12.08% year-over-year.
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