Chinese Leading Pig Farming Enterprise Muyuan Group released its financial report on the evening of April 26th, showing a net loss of over 2.3 billion yuan in the first quarter of this year, with a net loss exceeding 4.2 billion yuan from the previous year. Data indicates that the Chinese swine breeding industry was generally in a state of continued losses last year.
According to reports from Securities Times and The Paper, in 2023, Muyuan Group achieved operating income of 110.861 billion yuan, a decrease of 11.19% compared to the previous year. The net profit attributable to the owners of the parent company was a loss of 4.263 billion yuan, compared to a net profit of 13.266 billion yuan in the same period of the previous year.
In 2023, the net cash flow generated by Muyuan Group’s operating activities was 9.893 billion yuan, a decrease of 57.01% compared to 23.011 billion yuan in the same period of the previous year.
Muyuan Group stated in its annual report that the Chinese swine market exhibits significant cyclicality, with fluctuations in swine supply being the main factor affecting swine prices. Since December 2022, swine prices have entered a downward trend, maintaining low levels throughout 2023, with only a temporary rebound in the third quarter.
Furthermore, Muyuan Group’s first-quarter report for 2024 revealed a net loss of 2.379 billion yuan attributable to the company’s shareholders, compared to a net loss of 1.198 billion yuan in the same period last year, indicating a further widening of the losses.
Reportedly, in the Nanyang region where Muyuan Group leads in costs, over 4 million pigs were sold in 2023, with an average swine breeding cost of around 14.1 yuan per kilogram for the year.
On the evening of April 25th, Shen Nong Group released its financial report, showing a net profit attributable to the parent company of 3.5659 million yuan in the first quarter of this year, a 96.63% increase compared to the previous year.
Shen Nong Group’s annual report for 2023 revealed a shift from profit to loss in net profit attributable to the parent during the reporting period, with a loss of 4.01 billion yuan, marking a 257.04% decrease compared to the previous year.
While the revenue of Shen Nong Group’s key products, including live pigs, pork products, and by-products, grew, the gross profit margins declined. The revenue for these items increased by 1.092 billion yuan and 1.147 billion yuan respectively, a growth of 19.55% and 33.68%, but the gross profit margins decreased by over 10 percentage points to 2.61% and 5.03% respectively.
This situation is a consequence of oversupply in the Chinese swine market in 2023, leading to long-term bottoming of pig prices.
The expansion of scale requires substantial capital, causing Shen Nong Group’s monetary fund balance to decrease from 996 million yuan at the end of 2022 to 544 million yuan at the end of 2023, a 45.32% decrease.
Against this background, Shen Nong Group’s asset-liability ratio also increased, rising from 14.46% at the end of 2022 to 26.41%.
After three years of the pandemic, Chinese pig farming enterprises continue to incur losses. According to data from China’s Ministry of Agriculture and Rural Affairs, the average pig selling price nationwide in 2023 was 15.35 yuan per kilogram, a 21.10% decrease compared to the previous year, indicating a sustained state of losses in the swine breeding industry.
Recently, several major pig farming giants in China have reported significant losses in their financial reports. For instance, Wens Foodstuff Group reported a net loss of 6.329 billion yuan last year; Aonong Agriculture suffered a loss of 645 million yuan; New Hope Group is expected to incur a loss of 4.5 billion yuan after deducting non-recurring gains and losses; Tianbang Food estimates a loss of 2.6 to 2.9 billion yuan last year; Shuanghui Development expects to report a loss of 5 to 7 billion yuan; and Anova Food forecasts a loss of 3 to 3.6 billion yuan. Additionally, many pig companies have proposed restructuring plans or are facing bankruptcy.