Friends, good evening everyone. Good evening, everyone. I will first report the performance of the company in the first half. In the first half of 2024, the total packaged meats sold was 1.5 million metric tons, 6% lower than last year. The pork sold volume was 0.8 million metric tons, 10% lower than last year. The total revenue was $12.29 billion, 6.3% lower than last year. EBITDA was $1.47 billion, 37.8% higher than last year. Operating profit, $1.14 billion, 78% higher than last year. Profit before tax, $1.04 billion, which is 70% higher than last year. Profit for the year, $796 million, $58.6 million higher than last year.
Profit attributable to the owners of the company, $694 million, 81% higher than last year. EPS 5.41 US cents, 81% higher than last year. Based on the company's performance as well as the liquidity, the board proposed to declare a dividend of 0.10 HKD per share, which is twice the amount of last year. The packaged meat business is our core business, contributed to 52.8% of revenue and 99.7% of operating profit. Pork business contributed 40.1% of revenue and 8.3% of operating profit. Other business contributed 7.1% of revenue and -8% of operating profit.
In terms of regions, China contributed 31.7% of revenue and 39.2% of operating profit. US, Mexico was 54.3% of revenue and 47.7% of operating profit. Europe business, 14% of revenue and 13.1% of operating profit. In the first half of this year, the global economy continued to recovery, but was uneven, and the persistence of geopolitical tensions and economic policy uncertainty, consumer confidence and the demand have remained subdued. A significant moderation in inflation has alleviated cost pressure for corporates and heightened expectations for a relaxed monetary policy. Hog prices in China increased due to lower hog prices, hog supplies. Effective demand for consumer goods was insufficient.
The market environment for the pork business in the US improved as feed prices fell, hog prices rebounded, and market spread widened. In Europe, the feed cost decreased and hog prices fell slightly from high levels. WH Group leveraged its global platform and a vertically integrated business model, promoted efficiency improvement and cost control, optimized the business structure, and led to a significant improvement in operating results. Based on information from NBS of China and USDA, the number of slaughter hogs in China decreased by 3.1% to 364 million heads in the first half of 2024. In the first half, the average hog price in China was 15.59 RMB per kilogram, an increase of 3.1% year-over-year.
The number of slaughter hogs in the US increased by 1% to 63.77 million heads. In the US, the average hog price was $1.38 per kilogram, up 7% year-over-year. In Europe, the average hog price was EUR 1.64 per kilogram, decreased by 6.1% year-over-year. The average corn price in the US was $4.47 per bushel in the first half of 2024, down 32.6% year-over-year. On the other hand, the average pork cutout value in the US was $2.08 per kilogram, an increase of 13.7%. So the industry market spread has widened as the pork values outpaced the hog price.
In China, the operating profit in the first half was $447 million, 14% lower than last year. Packaged meats profit was $460 million, 1.5% higher than last year. The pork business profit, $28 million, 33% lower than last year. In China, we continue to adjust the price, improve mix, and control costs, and enhance internal management, maintain stable operations amid challenging market environment. For packaged meats, the sales volume declined due to sluggish demand, but profitability hits a record high through effective cost control and innovative market management. We actively developed new channels. Sales volumes in three new channels, including membership-based warehouse stores, snack shops, and convenience stores, increased by 45% year-over-year. E-commerce sales volume increased by 18% year-over-year.
Volume and the profit of pork business was under pressure due to sluggish meat consumption and intensified market competition. Frozen meat reserve drove a quarter-over-quarter improvement in profits in Q2 as hog prices and meat prices increased. Volume and KPIs of poultry business improved year-over-year, but unfavorable market conditions posed challenges to profitability. In US and Mexico, in the first half, the operating profit was $544 million. It's a substantial improvement compared with $36 million of last year. Packaged meats profit was $614 million, 6.2% higher than last year. Pork loss was $4 million, substantially narrowed compared to $495 million last year. In the US, we continuously cut costs and enhanced efficiency, optimized the business structure, profit rebounded remarkably.
Packaged meats business continued to adjust the price, improve mix and control costs, and sustain a steady growth, with profits hitting record high. Operating results of pork business increased significantly due to improved market dynamics, hog production reform, and efficiency improvement measures. We continue to reform hog production to reduce the volume and lower costs to enhance long-term competitiveness. In Europe, operating profit was $149 million. The packaged meat business profit $63 million, 70% higher than last year. Pork profit $71 million, 61% higher than last year. The Europe business leveraged its vertically integrated model, took measures to cut costs and improve efficiency, with revenue and profits both hitting record highs. Earnings of pork business increased significantly as the segment benefit from lower feed costs and cost-saving initiatives.
Packaged meats effectively managed prices and optimized product mix, with profitability increasing substantially. We also expanded value-added packaged meat business through M&As. We completed the acquisition of 50.1% equity interest of Spanish packaged meat producer Argal in March 2024. In the future, WH Group will continue to consolidate our global resources, adhere to the adjust price, improve mix, and control costs business philosophy, leverage our strengths in industrialization, scale, and diversification, and maintain our market-leading positions. In China, the packaged meat business will adapt to changes in consumption behavior, and to take advantage of the channel transformation, and accelerate industrialized production of Chinese-style products.
For fresh pork business, we'll leverage the advantages in branding and nationwide presence, vertically integrated model and a scale sales network, to consolidate our resources in fresh meat and frozen reserve, domestic production imports. We will improve the management capability and profitability of hog production and poultry business, and forcibly will accelerate the double sales network initiative, promote channel innovation and transformation. In U.S. and Mexico, we will continue to optimize the business structure, reduce the hog production capacity, and lower production costs. For packaged meats, we'll focus the development, optimize its product mix, drive volume growth, while maintaining strong profitability. We will also improve profitability of fresh pork business through efficiency improvement, sales channels optimization, and value-added product portfolio.
We will also accelerate scientific and technology innovation, optimize supply chain management, and continuously enhance automation to cut costs and increase efficiency. In Europe, the packaged meat business will strengthen price management, optimize product mix, and promote channel innovation to enhance profitability. Fresh pork business will optimize capacity, increase by-product yield and value. We'll leverage integrated business model, accelerate the development of poultry business, and we'll also integrate newly acquired business and identify investment opportunities to further strengthen speed business frames. So, that's all for the briefing, and now we'll move on to Q&A.
...So question from Jefferies, the first two relates to the US business. The first is around the hog production reformation. Are there any progress that we could share with the analysts and investors and any other targets around the hog reformations we could share? And secondly, related to the recent acquisition of a packaged meat business in Tennessee, so, does this mean that we will continue to grow our business through more, M & As in the U.S., in the packaged meats? And the third question is around the WH Group. So, apparently we have announced the potential spin-off IPO of Smithfield. So after the IPO of Smithfield, WH Group will essentially become a holding company. So how will WH attract the interests from investors? Are we going to have a more generous dividend policy, or are we going to have more long-term share repurchase programs?
With our hog production operations, we have continued to reform that business over this past year. As you have followed us, you know, we've reached a high point in hog production of 17.5 million hogs back in 2019. Since then, we have systematically reduced that number through different parts of our organization, especially where we had hog production assets that were geographically displaced down to a run rate this year. We expect to be a little below 15 million hogs. And I will tell you that reformation is continuing. We're still looking at ways to take underperforming hog production assets out of the system. As it relates to further progress, we continue to look for ways to remove hogs. As we've stated on previous calls, ultimately our goal is to be below 10 million market animals per year. And I would just say as an update to that, we're working toward that number, and we expect to be able to report more progress to you against that number in the coming quarters.
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As it relates to the acquisition we recently completed in Nashville, that was a strategic acquisition from the standpoint that it gave us additional capacity in, in the dry category in our business. We're very excited about the capability and the capacity the Nashville plant brings to us, as well as the team members that are now part of Smithfield. I will tell you from a future M and A strategy, we'll continue to be opportunistic, we'll also be very disciplined in our approach to M and A. We will look for bolt-on acquisitions or things that give us capabilities in areas that we don't currently have. So we'll, we don't have anything to report for the future from the US standpoint, other than to tell you again, we'll remain very disciplined and very opportunistic as those opportunities present themselves.
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Thank you. Now, Zhou Xiaoming, the third question was for WH Group?
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Okay。
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So in terms of the U.S. IPO of Smithfield, we have made announcement in July 14. And all the details, please refer to that announcement. Given the restrictions of U.S. securities regulations, we're not able to share any further details beyond that at this point. And in the future, WH will continue to be the controlling shareholder of Smithfield, U.S. and Mexico business, and it will continue to be a platform with operations across China, Europe, and U.S. And we would believe that will continue to improve our operating efficiency, will continue to generate returns for the shareholders. So in terms of dividends, our policy is not the of payout ratio not less than 30%.
As our cash flow, our profitability continue to improve, we will try to provide more returns to our shareholders. For example, last year, despite the significant losses in our U.S. hog production business, we maintained our dividend to the shareholders.
Veronica. Veronica, Veronica?
How? Veronica.
Two questions both relate to the US business. The first is about the Smithfield packaged meat business. In the second quarter, the profit per ton of packaged meat business has improved quite significantly and made a lot of contributions to the overall profitability. So how, with that in mind, how are we going to look at the mid to long-term target of profits for packaged meat business? And can you also talk about the reasons or the drivers behind the second quarter profitability improvement of Smithfield packaged meats? And the second question relates to the hog production. Shane, you have discussed the target, long-term target of 10 million hogs per year of production target. So what is the timing of this target?
Is it a 1- to 2-year target, 2- to 3-year target? And if we can achieve 10, 10 million hogs per year of production volume target, what would be the profit of hog production business look like? Yeah. Shane? Shane. Shane, can you hear us?
Yes, I can hear you.
Yeah.
Can you hear me?
Yes.
Okay. Sorry. So I'll start with the hog production question. So again, our long-term goal, or our goal, was to reduce our exposure to hog production to around 10 million head, and that would still leave us about 32%-33% vertically integrated. We'll continue to execute against that strategy as we have been. Again, we're down from a high of 17.5, to this year, we'll be at a run rate of down below 15 million. Excuse me. We're looking at this in ways, first, from a geographic area and from a underperforming asset area, and we've kind of worked through those both, the things that took place in places like Arizona and Utah. And so we've been reducing systematically throughout the process.
What we have to be aware of and what we're balancing is the need, as we reduce this hog production, to do it in a way that protects our downstream businesses, so our fresh pork business and ultimately our packaged meats business. And so we're taking a very geographic strategy or geographical approach in our strategy to how we do that. So I think over a time period, we're looking at this over the next, I would say, 2-3 years, is our target to be down below 10 million. Now, that could be expedited as we find ways to change the format, I would say, of some of our larger producers, and we're showing some success in doing that today.
But ultimately, I would say over the next two years, we would like to see that number down below 10 million. As it relates to profitability, again, many of the assets or the farms that we have removed have been either geographically displaced, meaning they have a high cost because of their geographic location, or in some cases, just underperforming assets. And so as we remove those assets, the impact on our profitability is immediate. Now as for a range of profitability, obviously, that depends on the markets. It depends on the corn and soybean meal markets for the input side and the hog pricing market on the output side.
It's hard to give you a level of profitability other than to tell you that we do believe these moves will improve our continued improvement and ultimately profitability in the hog production segment. I'll let you translate, Xiaoming.
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Our current this, this because our this is also a continuous progress process, we actually from 2019's peak period's 17.5 million head, now already gradually decreased to, according to current's a rate, probably is 15 million head's such a, level. We in this reducing farming scale's time, mainly consider two points, one is region, area, and its this, performance, performance performance. For some areas relatively remote, not beneficial to our whole's this, network's some, this, hog farms, like Arizona, Utah's this hog farms, we went to conduct some reductions, then including for some performance not good's this hog farms, also conducted some reductions. Then we in reducing's time also will, pay attention to go, protect our downstream, that is this, slaughter industry and our meat products industry, because, hog farming is also their's a main's a supply's source. About this time point's words, 10 million head per year's this target, should be a 2-3 year's a target.
Of course, if have opportunity's words, we also will as soon as possible go accelerate. If we have opportunity put some big's this contract farmers, his some, this, and his a cooperation method conduct adjust's words, we also hope can, accelerate this target's a realization. Then from this, profit aspect to see, we in reducing, capacity's time, also is focus on go reduce some cost relatively high, performance relatively poor's this farms, such's words, can make our's profit reach can have a, rapid's a improvement. About long-term's a farming industry's profit target, this, have very many's uncertainty factors, relatively hard to say, because, this farming industry's profit depends on corn's price, depends on soybean meal's price, depends on this hog's price, so very hard give - give out a clear's this data's a target. But, this we believe we do 's these, reduce farming's work, is can help us continuously go improve hog farming industry's profit.
To your second question on the packaged meats business. The packaged meats business continues to perform incredibly for us. Yeah, in the second half or in the first half, second quarter, we saw a segment profit per ton above $900 and a margin of approaching 17%. So we're very excited and very happy with the way that business is performing. We've done a lot of work on the cost side of that business, on the SKU or business simplification side. This is to your question about what the drivers have been, and again, it goes back to the three main areas when we think about our business, and that's cost control, price adjustment, and our mix.
We're constantly looking at ways to improve all three of those, to keep enhancing our packaged meats business ability to continue to provide the level of profitability that we've seen over really the last three years in that business. I'll let you translate that.
Regarding the profit for packaged meats, in the second quarter, it reached a profit of $900 per ton, and the profit margin was about 17%. This is actually a very good result for us, a good performance. We are very satisfied with the profit for packaged meats. The reason packaged meats was able to achieve this very good profit is also dependent on the three main works we did in the past few years, which are actually around its costs, around pricing, and also around product structure, the continuous adjustments and optimizations conducted. In terms of costs, we continuously seek opportunities to save costs and optimize our cost structure.
We do expect as we move through the second half of this year to see some of that profit per ton and margin to seasonally go down, as we have seen that in the past few years in the back half of each year. And that's really being driven by the timing of the holiday seasons coming to the U.S., which are typically a higher volume but slightly less margin. But we do, on an overall basis, continue to be very bullish on our packaged meats business and very happy about where that business is moving and how it's continuing to provide stability and earnings to the Smithfield business.
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you. Mark, do you have anything you would add to the packaged meats discussion?
Yeah, I would just, to further what Shane says, really about pricing discipline, our, our mix improvements, and, and really about the operational efficiencies that we've been able to generate within our facilities. So our plant operations really focusing on yield, labor and overhead improvements, as well as in our supply chain operations, so our transportation and warehousing, we've been able to, to really streamline our operations and, and drive some significant efficiencies with, with our goal or our culture of offsetting any sort of inflationary impact through, through these cost savings. So, the, the team, within the facilities and within, within supply chain have just done a tremendous job year over year of, of helping to, to offset inflation to keep those margins high.
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Hi, management, hello, I am Linda from Macquarie. I have a few questions. The first one I want to ask is still about the United States, that is, I don't know if management can help us sort it out again, the current upstream hog production in the United States, overall supply and demand situation, then, on the entire market is everyone also the same as Smithfield, then doing this capacity reduction, then roughly with us, look, this may let us recalculate again, that is, on the entire market when can we see? The entire supply and demand is a relatively balanced situation. This is the first one. The second, I want to ask, is our upstream hog production, when doing this rationalization, especially long-term, we want to reduce it to about 10 million heads, then in between will there be some costs, perhaps that will occur, then, for this thing, how do we estimate?
Then, the third question is, in 2018, California had one called Proposition 12, then that Proposition 12, it requires, every hog, every head of hog approximately breeding space, approximately is 24 square, should be 24 square meters, square feet. Then I want to know this thing, from this year second quarter to second half of the year, will to our upstream hog production bring costs on some increase, then cause no way to reach our expected this profitability. Roughly just these three questions, thank you.
So three questions from Linda of Macquarie, all related to the U.S. hog production. The first question is, what's the management's view of the hog production supply demand dynamics in the U.S. industry? So are all the hog producers downsizing their capacities? And if people are all trying to balance the supply and demand, when can we see the balance, a more balanced market or more healthy supply demand dynamics? And the second question is around the hog production reformation. As she mentioned, there's a target to achieve 10 million heads per year of hog production volume. So to achieve that, do we expect any sort of one-off costs or impairments or other losses? So how should we estimate those kind of expenses? And the third question relates to the Prop 12 of California. So how will that impact the cost of our hog production business?
Okay. So I'll start with the reformation. Again, the goal of 10 million, and I think your question was specific to should we expect more impairments? I would tell you from a material basis, I think we have taken many of the cleanup costs, meaning the asset write-downs or asset write-offs, in 2023, with the closures of Utah, the sale of Arizona, some of the major reformational changes we did in Missouri, for example, where we took 60,000 sows out and wrote off many of those assets. So I would tell you from a materiality standpoint, the majority of those impairments have already taken place. Now, as we go forward in this next step, we're—there is a several—it's a multi-pronged strategy to continue to reduce that. Some of that will be farm closures, some of that will be in the context of not renewing contracts. Many of our hogs come from contract farms, so as those contracts move to expiration, just not renewing those contracts and replacing that internal supply with an open market supply.
But the third piece of this is inventory, and so the value of the inventory that we have on hand, as we sell that inventory at a fair value, to a further processor or someone who's going to become an independent grower for us, there could be some potential impairment charges related to that inventory, to the extent that we have inherent losses embedded in that inventory value. And so if we—the, from a future impairment standpoint, that's where I would expect to see any impairments if we have them, depending on the timing and where the markets are, when we enter into either a sale or a conversion. But I would tell you from a fixed asset standpoint, that materially all of those assets that we would expect to be written down or written off, that has already taken place. From a Prop 12 standpoint, you know, Prop 12 became effective in 2023. We have and continue to see some impacts of that in our business.
We converted some of our sales to Prop 12 to support some of our customers that requested it. It is an additional cost. Where we really see the impact on our business is really on our packaged meats business, and that's in the bacon category, where we were selling bacon into the California market, ready to cook bacon. So we are seeing some impact on some of our volumes from that standpoint. But I would tell you it's, it's there's becoming more availability in the market, which is what we expected to see, where we're able to, one, either buy more Prop 12 pigs externally, or two, buy Prop 12 raw material, to help us bring back some of that volume. And so from a Prop 12 standpoint or a Question 3 in Massachusetts, I think we're in a good position. We have a good strategy to continue to support our customers in the California and Massachusetts market, without going out and investing a tremendous amount of capital in converting some of our internal farms.
As to the supply dynamic, you're right, that the US is still in an oversupply. We have seen this year, across the industry, there's been better health, so we're seeing more pigs come to market, we're seeing more weights on the market than we would expect to see this time of year. And so I do think that there will be maybe a little bit more downsizing, but I wouldn't expect that to be rapid. The underlying dynamics in our production, if you look at the raising cost side of the equation, when you look year-over-year, corn prices are down about 31%, and soybean meal is down about 11%. And so we're seeing some real benefit in raising costs across the industry, compared to 2023. And I think that will keep people from downsizing too quickly. But we are in an oversupply scenario, and so you know, that is something that we stay focused on or keep apprised of, and adjust our strategies accordingly.
First, regarding the continued capacity reduction in the hog farming industry and the potential costs or expenses that may be encountered. Actually, most of the impairments related to fixed assets, most of the impairments, occurred in 2023 in Utah, Arizona, and Missouri during these production reductions, basically all of them. Then, most parts of the fixed assets have already been booked. In the future, when reducing production, we will adopt a strategy of advancing in several directions simultaneously. On one hand, we will eliminate the farms; on the other hand, when our contracts with contract growers expire, we will not renew them, but instead replace the supply from these contract growers by externally purchasing live hogs, through this method to reduce production. Then, in the process of reducing production, if losses occur, they may be related to the live hog inventory, because a very important asset in our hog farming industry is the live hog inventory.
Then, when selling these live hog inventories, or in the process where contract growers become our suppliers, due to timing factors or affected by market factors, there may be some costs generated in terms of inventory. But most related to fixed assets, the impairments, basically all have already occurred. Regarding California's Proposition 12, this should have limited impact on our hog farming industry, because we have converted some of our hog farming farms to farms that comply with California's Proposition 12 to support some of our customers. But the California law may have a relatively larger impact on our packaged meats business, because the implementation of this law, especially for the packaged meats' bacon business, the implementation of this law has affected our bacon sales volume.
But we also see that now on the market there are more and more live hogs that comply with California's Proposition 12, or rather pork supply, so we can also through external procurement methods meet California's demand. So overall, whether it is California's Proposition 12, or Massachusetts' Question 3, this Question 3, we all have good coping methods.
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Thank you. Hello, management team. I am Tiffany Feng from Citigroup. I have two questions. The first question is to follow up on the US packaged meats business. We see that the packaged meats mix is continuously improving. At the current $900 per ton level, I want to understand how much room for improvement the company sees in the next 2-3 years. From the several aspects just mentioned, including cost control, pricing, and product structure, which ones will still be the main drivers of improvement in the future? Additionally, I also want to understand the competitive situation in the US packaged meats market across different price segments. Please have management introduce it. Then, the third question is to understand about China, because everyone has asked a lot about the US situation. On the China side, we see that the second quarter was quite a bit worse than the first quarter.
Of course, we know that the overall consumer market situation in the second quarter was not very good, but I still want to understand a bit more from the company's perspective. What exactly happened in the second quarter, including external competition, demand, and some internal factors from our own company or strategic adjustments? I want to understand more about this second quarter, and what is the outlook for the second half of the year? Okay, thank you.
So three questions from Tiffany of Citigroup. The first two questions relate to the US business and third question relate to the Shuanghui business. The first one is about the US packaged meats profitability. So we already achieved a $900 per ton of profit in packaged meat business. So in the next two to three years, how much room do we have for further improvement in the profit per ton for packaged meat? As mentioned, there are a few drivers of our profitability improvement, including cost, including mix, as well as pricing. Which one of these could be the main driver or source of further profitability improvement? The second question is, what's the competition dynamics in the different price ranges of packaged meat products in the US market?
And the third question is the second quarter performance of Shuanghui is lower than the first quarter, is not as good as the first quarter. Obviously we understand the consumer market in China is not very strong, but we still wanting to understand what happened exactly. And then is it because of competition or because of the company's own strategic shift? And what's the outlook for the second half?
So, to your first question, U.S. packaged meats, how much room do we have to improve it? I will tell you, Tiffany, that we are always looking at cost, mix and pricing.
We continue to adjust those three on market dynamics. A lot of the improvement that we've seen over these last couple of years have really been from a number of initiatives, including cost control, so making sure we're being really efficient in our spend as it takes to market and produce those products. Mix, we're looking at ways to move out of lower margin packaged meats and into more higher margin. The acquisition that was referred to earlier in Nashville is a great example of how we're adding capacity to our network in areas that have much higher profit and margin profiles. And then pricing. And so we, we're always looking at ways that we can improve our pricing, increasing our-- by using our scale or our competitive advantages that we have in certain places. And so I will tell you that we still have room to improve, and we're still focused on improvement in those areas.
I expect as we continue to move across these next years, we'll continue to see improvement in our margin profile and in our profitability per ton. As we continue to execute on those three core principles, again, of cost control, mix adjustment and price adjustment. We'll continue to look at ways to simplify the business. We've taken out a number of our SKUs to really simplify our business. We're looking at operationally, how to do things like decreasing downtime. We're fortunate we're in areas where labor has really come back strong, giving us the ability to do some things that maybe we couldn't have done over the last 2-3 years. And so I will tell you, the environment for us to continue to improve that business.
... Yes, yes, yes there, and we expect, as management team, we expect to see continued improvement in the packaged meats business. Xiaoming , I'll let you translate that.
Regarding US packaged meats, in the future, there will still be space for continuous profit improvement. That is, the three aspects just mentioned: cost, structure, and price. We will seek various cost control methods in this production process to optimize our cost structure. In terms of product structure, we will reduce some low-profit products and increase more high-profit single products. For example, the acquisition in Nashville just mentioned: actually, the capacity acquired, the corresponding products it produces belong to high-profit products, so we will adjust our capacity to produce more high-profit products. On the price side, we will continuously seek space to increase our prices, utilize our scale, utilize our various competitive advantages to find opportunities to increase prices. So in the future, we will still have opportunities to improve the profit of our entire meat products, per ton profit.
We will continue to simplify our entire process flow, then reduce the downtime in this production process. And now, because the overall labor situation in the US has improved, it also gives us a good environment to make some improvements that we couldn't do in the previous environment. So overall, we will still have opportunities in the next few years to continuously improve the per ton profit of our packaged meats.
Xiaoming , I'll take the second question. So in terms of competition in packaged meats for pricing, we do see significant competition both across channels and across price tier.
So in the most recent reporting periods, food away from home inflation was up about 4%, while food consumed at home was up about 1%. So what you're seeing is consumers trading down from the dining out experience in the food service channel and consuming more food at home, which actually somewhat benefits Smithfield as about 60% of our business is in the retail and deli channels, versus only about 25% in food service. So as consumers trade down from that dining out experience and into food at home, we're also able to retain that customer across our price tiers and within private labels. So we participate in the private label side of the business, where some of our competition does not. So about 60% of our business is branded and about 40% is private label. So we're able to meet the customer and ultimately the consumer where they want to be on a price point, because we play in the premium, middle tier and value segments within the retail business.
So a consumer may trade down across our branded tiers to meet their price points, but also as they would trade out into potentially private label at a lower price, we're able to retain that customer again within the Smithfield franchise, where some of our competitors do not play across price tiers and they do not play in private label, so they lose that customer and that consumer entirely outside their franchise.
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For the second quarter packaged meat business, the performance was, we do see volume and profit both decrease. So for the volume decrease, there are two reasons. One is that the end market, the demand from the end consumers, was not strong, so the channel sell through was not very strong. And secondly, because the distributors do not have very strong confidence in the consumer market, so they want to maintain a low level of inventory. So that has impacted our sales to the distribution network, and also because of relatively lower volumes that has impacted per unit fixed costs, so that has a negative impact to the profit.
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So for fresh pork, there are also three reasons. The first is the weak consumer demand. Second is last year we had a relatively high base, because we had harvest more hogs to prepare for the, to take more inventories for the frozen products to take advantage of the lower cost environment. But this year, the pork pri- the hog prices has recovered, and certainly because of the high pork prices that has a negative impact to the consumption.
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And thirdly, this year, the chicken price has dropped by 20% year-over-year, and also the subsidies we received from government also decreased significantly compared to last year. So these two has contributed to a year-over-year decrease in profit of RMB 250 million in the second quarter.
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So for outlook on packaged meat business, we expect the third quarter would be stable, but we'll see growth in the fourth quarter. And for the full year, we think the volume will be stable and the profit will increase significantly.
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For fresh pork business, because the second half is seasonal, seasonally strong, and also because of, we are able to benefit from, low cost frozen inventories, we accumulated earlier. So we believe both volume and profit will increase.
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We believe the whole company, for the whole company, the volume and profit will both increase.
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So another question from Linda Macquarie around the packaged meat business in China and US. So, the company has a very clear disclosure of per ton profit for packaged meats in both China and US, but she wanted to understand more about the sort of industry reasonable level of profit for packaged meats on a per ton basis, so that, you know, people can better understand how much room we would have for a further improvement in profitability. Shane, Mark, do you want to take the first one around US?
Sure, in terms of, in terms of profitability in the US and the competitive environment. Again, over the most recent 10 quarters, our packaged meats business has outperformed Tyson on a percentage basis, on operating profit percentage basis, the last 10 quarters straight, and 8 out of the last 10 quarters, we've outperformed competition being Hormel, for 8 quarters. So again, our packaged meats business continues to be extremely profitable relative to competition. And again, we continue to believe that we can maintain these high margins through our mix improvements, our price discipline and really the operating efficiencies that we talked about previously, both in our plant operations, within supply chain, and also in SG&A reduction. So again, we're very bullish on the opportunity to maintain those solid margins within packaged meats.
In the United States, in the past 10 quarters, from the profit margin perspective, we have all been higher than Tyson. Packaged meats, in 10 quarters there were eight quarters where, from the profit margin perspective, the profits of packaged meats have all been higher than Hormel. But we believe we still have continuous space for improvement, that is, the cost prices just mentioned, and the product structure, including in terms of expenses, we will seek various opportunities to further reduce our cost structure, supply chain and so on, so we still have opportunities to further strengthen and improve our packaged meats profits, and we are very confident about this.
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China.
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For China, the packaged meat profit per ton for the first half was 4,700 RMB per ton, and it's a relatively high level. Last year was around 4,000. Based on our understanding in China for meat to large scale packaged meat companies, the profit per ton was around 1,500-2,000. For the smaller scale companies, it was probably 500-1,000. So we have significantly outperformed the industry for two reasons. One is we have a strong brand value, and second, because we have a vertically in...
We have a very good vertically integrated model, so we have good cost structure. Overall, we think RMB 4,000-RMB 4,500 profit per ton should be a good level of profit for packaged meat business. In the current market environment, it's not suitable to target higher profits because that may have negative impact to the volume.
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Three questions from CICC. The first is around China packaged meat business. So do we see any divergence of the performance of packaged meat products across different price ranges? And then, as mentioned earlier, the new channel seems to be performing very well. What's the volume contribution from these relatively new channels? And second question is, what's the packaged meat volume performance in July and August? And does that, is that consistent with our outlook for the second half? And certainly, we had a significant increase in dividend per share for the interim dividend. Are we, can we expect the same level of increase for the full year dividend?
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So for the first two questions, in terms of the product mix, the premium products represent 67.7% of the volume in the first half, which is 0.5 percentage points higher than last year. The volume from the new channels, namely the membership-based warehouse stores, the snack stores, the CVS and e-commerce, it's 7% volume in the first half. And for July and August packaged meat performance, we are not in a position to share too much detail on the numbers, but we do see better performance compared to the first half.
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So in terms of WH dividends, for the first half, we are making the interim dividend of 0.1 HKD per share, compared to 0.05 HKD per share last year. So the significant increase is due to the strong performance in the first half, compared to last year, as well as our strong cash flows.
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Again, our dividend policy is not less than 30% of payout ratio. So for the full year dividend, we will assess the performance for the full year, assess our liquidity, our cash flow, and declare dividend based on our policy.
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