WH Group Limited

Okay. Good evening, friends from the Welcome to WH Group's conference call for the announcement of our results for the first half of 2026. This is Guo Lijun, Executive Director and Chief Executive of WH Group. Joining today's results announcement are members of the management team from WH Group and from our subsidiaries, Shuanghui Development, Smithfield Foods and Morlini Foods in Europe, namely Mr. Wan Long, Chairman of the Board and Executive Director of WH Group. Mr. Wang Hongwei, Vice Chairman of the Board of WH Group and Chairman of Shuanghui Development Mr. Ma Xiangjie, Executive Director of WH Group and President of Shuanghui Development Mr. Liu Songtao, Executive Vice President and Chief Financial Officer of Shuanghui Development Shane Lewis, Chief Executive Officer of Merlini Foods Ms. Zheng Jingyan, Chief Financial Officer of the company, and Zhou Xiaoming, Vice President of the company. Today's announcement is divided into two parts. We'll first present the company's financial and operating performance for the first half of the year, and we'll then take your questions. So first part, For the first half of 2026, packaged meat sold is 1.522 million metric tons, pork sold 2.079 million metric tons, year-over-year growth of 6.1%. Revenue $13.827 billion, 3.3% higher than last year. EBITDA $1.681 billion, 6.1% higher than last year. Operating profit $1.231 billion, 2.2% decline compared to last year. Profit before tax, $1.221 billion, 6.2% higher than last year. Profit for the period, $947 million, 10.5% higher than last year. Profit attributable to the owners of the company, $773 million, 6.6% higher than last year. Basic earnings per share, 6.02 US cents. The board has also declared an intra dividend per share of 0.2 Hong Kong cents. Total amount would be roughly $330 million US dollars. Despite challenging operating environment, we have achieved robust performance with growth in both revenue and volumes. Looking at the business segments, PackageMate is still our core business contributing to 51.3% of our revenue and 89.4% of our operating profit. Pork Business is also our major business contributing to 39.1% of our revenue and 14.3% of our operating profit. Other business and contribute to 9.6% of revenue and a loss of $45 million. From a region perspective, North America contributes to more than 50% of our revenue, which is 52.9% in the first half. China business was 30.5% and contributed to 36.8% of the operating profit. European business contributed to 16.6% of revenue and 9.7% of the operating profit. In the first half, the global economic growth moderated, geopolitical conflicts elevated, trade tensions continued, and a policy environment remained uncertain. China saw herd continue to reduce while productivity improved. Abundant supply caused the hog price to decline sharply year over year. U.S. pork supply increased. Hog price dropped year over year. Feed cost was favorable due to lower grain prices. Hog production remained profitable. However, fresh pork faced the challenges from narrowing market spread. In Europe, animal disease export restrictions resulted in pork oversupply inside European Union. Hog price dropped significantly, pressuring upstream pork operations. WH Group leveraged our global platform and value chain, promoted efficiency improvement and cost savings, optimized the business structure, continued with pricing mix and control strategy, achieving the growth in volume while the operating profit decreased slightly. Packaged Meat, as the core business, saw growth in both volume and profit. In the first half, the number of slaughter hogs in China increased by 1.7% to 372.6 million hats. The number of slaughter hogs in the US decreased by 0.5% to 63.08 million hats. From a pricing perspective, the prices dropped in all the regions. In China, the average hog price was renminbi, 11.23 per kilogram, down 27.5% year over year. US average hog price was 1.48 US dollars, down 1.5% year over year. European average hog price was 1.2 euro per kilogram, down 20% year over year. In the US, in the first half, the average pork cutout value was 2.13 US dollars per kilogram, a decrease of 2.2% year over year. The market spread narrowed due to pork price decreased more than hog price. So the spread has narrowed. In China, the operating profit was $454 million, 4.4% higher than last year. Packaged meats, $458 million, 11.4% higher than last year. Pork business is a loss of $7 million, and year-over-year decline by $35 million. In China, we captured market opportunities, achieved growth both in volume and profit. Meat and packaged meat products' external sales volume reached record high. In packaged meats, we continued to deepen professional reformation, stepped up investment in the market, improved customer service quality, continued the price mix optimization and cost control strategy, adapted to changes in the consumption trend, volume increased while unit profit remained at high level. In pork business, it captured market opportunities, expanded customer base, harvest volume achieved a significant growth. Fresh pork profit under pressure due to severe competition. Hog production faced challenges driven by weak hog price. In poultry, it continued to expand in scale poultry production. KPI improved while raising costs reduced. Fresh poultry optimized the product mix, expanded network, and enhanced the competitiveness. Total poultry operations improved significantly. In terms of digitalization, we continue to deepen digitalization deployed extensively in production, sales, animal production, and internal management, empowering the company to achieve high quality development. In North America, first half operating profit was $658 million, 2.5% lower than last year. Packaged meats, $545 million, 4.2% lower than last year. Pork, $182 million, 11.7% higher than last year. In North America, we leveraged integrated business model focused on cost efficiency, operating profit was stable while net income achieved a record high. In US package meet, we leveraged breadth of product portfolio in a channel, volume remained stable. We continued the pricing mix optimization and cost control strategy, making raw material cost inflation profitability maintained at high level. In U.S. pork, the hog production benefit from favorable market and effective hedging strategy. Results improved significantly year over year. Fresh pork profit dropped due to narrower market spread. Total U.S. pork profit maintained growth. In Mexico, hog price dropped while the volume increased. profit achieved growth year-over-year. In Europe, in the first half, operating profit was $119 million, 20.1% lower than last year. Packaged meat, $97 million, 44.8% higher than last year. Pork, profit $1 million, year-over-year decline by $63 million. In Europe, amid unfavorable market conditions, we continue to integrate synergistic M&As, maintain volume growth, packaged meat, and poultry performance continue to improve. New M&A contribute to volume growth. Operating profit increased significantly year over year due to lower raw material cost and pricing discipline. Hog price dropped sharply due to animal disease as well as export restrictions. Pork business faced the challenges and performance was under pressure. Broiler price dropped. Poultry business grew both in scale and profit. In terms of M&As, we further expanded business footprint and increased the product offerings. We completed acquisition of Wolf Group, a leading German producer of premium sausages, convenient and ready meals. In terms of business strategies, WH Group will continue to consolidate global resources, leverage synergies, adhere to the business philosophy on improved mix, adjust price, and control costs, and the strategy of industrialization, diversification, globalization, and digitalization to enhance our leading position in the global meat industry. In terms of business priorities, we will focus on the following to lay a solid foundation for the long-term sustainable development. Number one, first enhance the pork business, optimize cost structure, improve hog production performance, grow fresh pork, and strengthen competitiveness. For packaged meats, further optimize the product portfolio, expand the customer network, and maintain steady growth in scale and profit. Number three, continuously optimize the pork value chain, steadily promote meat diversification, enhance global footprint, and strengthen overall competitiveness. Number four, promote automation and artificial intelligence across the organization, drive digitalization upgrades to improve quality, cost, and efficiency. So that's all from the business review, and now we'll move on to the Q&A.

Hello, can you hear me? Yes, I can.

Hello everyone, I am Adeline from Mingbao. I just want to ask if the cost has affected the Middle East situation, and what kind of impact do you predict this will have in the next six months? Thank you.