Investors and analyst friends, good evening. Welcome to our 2021 results announcement. We are using a telephone conference and also, voice live streaming online. We have our representatives, including our Chairman, Mr. Wan Long, our CEO, Mr. Guo Lijun, Executive Director, Mr. Ma Xiangjie. From Shuanghui, we have Mr. Liu Songtao, Executive Director, and also from Smithfield, Shane Smith. From Smithfield, CFO, Mr. Glenn Nunziata. Our CFO, Madam Yan Kam Yin. I'm Wan Hongwei, and I will pass the time to Mr. Guo to take us through the performance highlights and business review, and then we'll proceed to Q&A. Mr. Guo, please. Good evening, everyone. I'm going to report to you some key operating data. For 2021, packaged meats sold 3.32 million tons, up 1.3%.
Pork sold 4.36 million, up 10.5%. Revenue realized $27.293 billion, up 6.7%. EBITDA realized $2.476 billion, up 8.6%. Operating profit $1.96 billion, up 13.7%. Profit before tax $1.658 billion, up 10.5%. Profit attributable to owners of the company $1.043 billion, up 7.2%. Basic earnings per share $0.0737, up 11.7%. All figures are before biological asset fair value adjustments. After considering our operational details, debt level, and some external factors, including opportunities and challenges, the board has decided to issue a final dividend of HKD 0.14.
Together with the interim dividend, total payout is HKD 0.19, which represents 13.4% of attributable profit. If this proposal is endorsed on the 13th of June, we will register the shares. On the 7th of July, we will do the payout. If you look at segment revenue and operating profit, our core is packaged meat and also the main contributor to our profit. For 2021, contribution from the segment in terms of revenue is 50.6%. Pork segment, 43.9%. Profit contribution, 0.2%. Others, revenue contribution, 5.6%, and profit contribution, 3.4%. Revenue by region, 52% from U.S. and 46.7% of profit from the U.S. For China, revenue contribution 38.5%, operating profit contribution 47.3%.
For Europe, the figures are 9.5% and 6% respectively. Our operating cash flow, $1.8 billion, a drop of $530 million, mainly because in 2020 there were certain changes to our inventory, leading to bigger contribution to cash flow, and also because of the rise in the sales price in the U.S., driving up the receivables. CapEx, $933 million. The increase is mainly driven by the investment in the pork value chain and also poultry business investments. Dividend payout, $325 million, because last year we have done some buyback in the capital market. Interest-bearing liabilities grew to $4 billion. The leverage ratio is 0.41.
In terms of the operating environment, stimulated by widespread vaccination and loose monitoring policies in various countries, the global economy recovered strongly and commodity prices rose rapidly, which resulted in increasing inflationary pressures. The recovery of China's hog production capacity caused a sharp decline in hog prices, leading to lower costs for the pork and packaged meats business. Regulation and integration accelerated in the slaughtering sector, market competition intensified. The food service channel recovered and market demand increased as the impact of the COVID pandemic in the U.S. gradually receded, and coupled with a reduced supply of hogs and rising grain prices, hog prices remained high. Due to ASF, exports to European market were restricted and hog prices remained low, negatively impacting the hog production business. The number of slaughtered hogs in China increased by 27.4% year-on-year to 671 million heads in 2021.
By the end of the year, hog inventory in China reached 449 million heads, up 10.5% over the end of 2020. The hog price was 20.68 CNY per kilo, a decrease of 39% year-on-year. You can see more hog production and lower hog prices in general. For the U.S., number of slaughtered hogs decreased by 3% to 128 million heads. The hog price averaged at $1.55 per kilo, an increase of 55%. Operating results for China, we realized CNY 339 million operating profit, down by 18.4%. An increase of CNY 66 million for packaged meat and reduction of CNY 53 million for the pork segment. Operating performance was below expectation due to multiple internal and external factors.
Production volume and sales continued to grow, but profits declined. Profit per ton of meat products reached approximately CNY 3,700 for the year and exceeded CNY 4,000 in Q4, which were record highs. Major new products and new categories grew significantly. Sales of the 10 major new products accounted for 89,000 tons. Sales of Huaxiao Feng sausage increased by 51%, and spicy sausage increased by 40%. We also promoted meat industrialization and diversification. Operating profit in the U.S. increased by 121% to $919 million. Packaged meats increased by 55% to $885 million, and pork $64 million. U.S. business strongly recovered. Production and sales volume remained stable. Revenue and profits grew substantially. Food services channel recovered as COVID impact waned. COVID-related costs also fell.
Revenue of packaged meats food service business increased by 52% over 2020 and 6% over 2019. Profits of packaged meats increased significantly. Per ton profit hit record high. For Europe, operating profit $117 million, a drop of 32.8%. $108 million for packaged meats, up 17%, and pork a negative figure of $8 million. Pork business experienced higher costs and lower selling prices due to the impact of ASF and rising feed prices, resulting in a significant drop in profits. Sales volume and profitability of packaged meat business reached record highs by leveraging our vertically integrated business model. For packaged meat business in all segments, all geographies are very outstanding. We have reached a number of record highs. Significant operating performance of newly acquired business to inject new driver for our future growth.
Last year, we acquired this factory in Slovakia, which made very good contributions. Looking into the new year, we face opportunities and challenges. For opportunities, the impact of COVID has tapered off. Consumer demand rebounded, supply chain issues eased, and global economic and social activities gradually resumed to the normal level. Hog prices in the U.S. and China have decreased, which will facilitate the company's network expansion and sales increase and reduce the cost of packaged meats. At the same time, we are facing some challenges. Global energy and grain prices remain high and labor costs continue to rise, causing cost pressures. Geopolitical conflicts have intensified, resulting in complex and volatile international political and economic conditions.
The group will continue to consolidate its global resources, give full play to the advantages of industrialization, scalability, and diversification, improve the level of industrial intelligence, automation, and IT to enhance our comprehensive strength and achieve stable development, maintain our leading position in industry, and ensure sustainable development. For our China operations, we will develop catering channel and target family consumption, adjust product mix, and launch more products for consuming on dining tables, develop more diversified food products, including meat, eggs, milk, vegetables, and grains. Fresh pork segment will improve product mix and maximize product value based on market dynamics. We will expand upstream business to improve vertically integrated business model and promote meat diversification. We will also increase investment in technologies, further expand our scale and enhance the level of information technology and business intelligence to increase the quality and efficiency of our operations.
For our U.S. operations, we will continue to implement genetic improvement plan, improve hog production process indicators, carefully manage risk, and steadily increase the profitability of hog production business. For our pork business, we'll carefully manage procurement costs and selling prices and optimize product mix to improve profitability. Packaged meat business will further optimize product mix to increase market share and competitiveness, while maintaining our profitability at a high level. We will increase investment in technologies and optimize process flow to mitigate the impact of labor shortage and control production costs. For European operations, we'll leverage its integrated business model to hedge market risk and achieve synergistic development of upstream and downstream businesses. We'll continue to strictly control ASF and other animal diseases to reduce losses. We will promote integration of the newly acquired businesses and ensure smooth operations to achieve more synergies.
We'll seek investment opportunities to accumulate growth potentials. That's the performance highlights for the group in 2021. Thank you very much.
好，下面我们先请UBS银行的Mark先生，请您开始提问。UBS的Mark，您可以开始了。
喂喂，听得到吗？
听得到，您请讲。
管理层好，我是UBS的Mark，我这边有两个关于中国的问题。一个是关于我们的屠宰业务，我们去年的屠宰量上量比较快，想请管理层展望一下今年的屠宰量的情况。那另外在屠宰量增长比较快的时候，我们的单头利润情况会有什么样的变化？这个是关于屠宰板块。那第二个问题，关于肉制品的板块，我们看到一季度的时候，前不久有一个关于南昌双汇工厂的新闻，现在两个礼拜过去了，想请管理层介绍一下这个新闻对我们整体的业绩、对我们的品牌形象会有什么样的影响。这两个问题，谢谢。
马总回答。
This is Mark from UBS. I have two questions. The first question concerns the slaughtering business. We have seen a rather fast increase in terms of slaughtering volume last year. What is your expectation for the slaughtering volume this year? While the volume has been increasing rather rapidly, can you also share some information in relation to the per head profit level? My second question is in relation to the packaged meat business. In Q1, we have heard some news about the factory in Nanchang. Two weeks have already passed. Can you share some information in relation to the incident and how it has affected the image of our products?
好，我先回答你第一个问题，关于今年那个生鲜业务的展望。今年根据我们的判断，那个猪价总体来讲比去年是下降的，而且有明显下降。猪价下降也有利于生鲜品的扩散商量和盈利的提高，预计今年的鲜品盈利会比去年有明显提高，这第一点。第二个，今年的猪价的趋势是上半年低、下半年高，也为屠宰业的冻品工作提供了较好的一个行情的机遇，冻品的盈利也会大幅上升。第三点是我们2020年末冻品的库存降到一个历史较低水平，正常较低的水平，为今年的轻装上阵提供了基础条件。所以今年我们屠宰业的经营整体是坚持以鲜销为主，在合适的行情下，也会适度借助鲜品、冻品相结合的原则来参与市场竞争，提升盈利水平，提升屠宰规模。预计今年的全年的屠宰规模会实现一个大幅度的增长，盈利水平、单头利润会恢复到正常年份的这个利润水平。今年等于是两利，都是一个双丰收的概念。这是一个……
好，翻译一下哈。
Thank you very much for your questions. Allow me to share my views on your first question, which is the way forward for the fresh pork business this year. If we look at the pork prices in 2022, we believe we will see a clear drop compared to the year 2021. That will be beneficial to raising the profit level for our fresh pork business. We believe that we'll enjoy a better performance this year compared to last year. As for the overall price trends, for the first half of this year, the level will be rather low, and then it will reach a higher level in the second half of this year. That creates very good opportunities to our frozen meat operations, and we will grasp the opportunities to enhance the profit level for our frozen products.
Basically, we have already consumed all the inventory of frozen meat from last year, so this year we can start with less assets around us. This year, the total slaughtering scale will realize substantial growth, and we also believe that the level of profitability will resume back to a normal level. We believe there will be increases both in volume and profit.
我回答第二个问题，关于南昌双汇三月十四号被媒体报道这个事件。其实双汇这么多年一直坚持的是开放式的工厂，也一直欢迎包括媒体在内的各界人士的监督。三月十四日南昌江西电台报道以后，我们当天晚上就成立了调查组，连夜赶到我们南昌双汇，结合当地的监管部门一起对报道的问题进行了排查、整顿和规范。当地的执法部门也现场进行了查验和产品的抽检，结果是产品全部合格，生产管理规范。
Now allow me to respond to your second question, which is about the incident in relation to Shuanghui that took place in Nanchang. I can tell you this is not a serious problem, because our company has always been very open and we always welcome and we are grateful to all the concerns expressed by the media and also the supervision continuously coming from various sectors of the community. On that day, we have actually done some investigation in relation to the situation on site, and we have also done some sampling for testing at the factory, and we have submitted the samples to the local government authorities, and all our products have been proven to be of good quality, and our operations are well standardized.
这个报道当时生产没有受到明显的影响，南昌双汇的生产正常。由于这个媒体的炒作和发酵，当地个别市场超市让我们南昌双汇的工厂产品进行了下架处理。后期经过解释和协调，几天后全部恢复上架，目前一切正常。
At that time, actually there was no real impact on our production lines. I believe the whole matter was actually triggered by some ungrounded stories made up by the media. The impact was only on individual supermarkets who have temporarily removed our products from their shelves. After the coordination work was completed, our products have been put back on the shelves, and everything has gone back to normal.
这两个问题回答完毕了，谢谢。
Thank you.
好的，接着我们下面继续提问。下面提问的是来自摩根士丹利的娄超。娄超，您请讲。
好，谢谢 Robert。听得到吗？
听得到。
好，我有两个问题啊，一个是关于中国，接着刚才的这个问题，就是说想再看一下我们，就说肉制品，如果今年看整个的这个猪价下行，肉制品的单吨利润也会往上走，然后呢，屠宰业务的单吨利润也会往上走，同时屠宰可能这个量还不错。那么我们怎么看中国今年的整个的利润增长的一个前景啊？感觉上利润率，就是单吨利润和利润率都还是蛮有机会的，是一个比较好的利润率的水平。这是第一个问题。第二个问题是关于美国，要不我就先拿中文问，然后我之后翻译成英文。那么美国的一个问题呢，就是关于我看到2020年，特别是Q4，咱们的这个肉制品的利润增长非常高，然后2021年整体的肉制品，美国的这个总额，利润总额也达到了历史新高。那么我们怎么看2022年，特别是这个餐饮恢复，整个的这个猪价后面走势对整个这个肉制品利润的一个影响和展望，就我们美国的一个肉制品的增速，利润增速是怎么样的？同时呢，我们上游怎么看？因为我看这个市场的期货价格 imply 的这个
养殖的利润也在恢复，整个市场的状况是在恢复的. The questions are one is on China, one is on U.S. On China. The question was on packaged meat, whether the unit profit will have a significant upside this year given the downward trend of hog prices in China. Similarly, if the unit profit for slaughtering gonna normalize, adding all together, does it mean that 2022 we're gonna expect quite a good profit growth for China operation?
The second question on U.S. is mainly on the packaged meat profit, because the fourth quarter we did see a very good recovery on the segment profit for packaged meat. Given the recovery of demand and also the meat or hog price trend, are we gonna expecting continued improvement in the packaged meat profit for 2022 on top of a very good level last year? Similarly, we are seeing recovery of hog production profit implied by the future price in the market right now. What kind of outlook for the hog production profit for 2022 as well? Thank you.
马总，你先说。
好嘞，我回答您第一个问题。正像你看到的一样，今年对中国双汇来讲，今年是有利的。一个对屠宰业来讲，猪价明显下降，有利于屠宰业的整体利润的上升，无论是全品利润、冻品利润都会有明显上升。叠加屠宰规模的扩大，这个盈利空间会更高。同时肉制品受成本下降、规模上升的影响，利润也会有明显上升。这两个主业会助推双汇发展，今年利润会实现显著的增加。利润率的问题，受这个猪价下降的影响，收入会有所——增幅会小于利润增长，所以说利润率的增幅会大于利润的增幅。回答完毕，谢谢。
Thank you for your first question. Allow me to respond to that. This year we are seeing some very good support in relation to the operations of Shuanghui in Mainland China. Concerning the slaughtering business, we see a very clear falling trend for the hog prices, which is good news for increasing our profit level. Together with the expansion of our scale, we'll be able to enjoy even greater profits. For our packaged meat business, the decreasing trend for the price will mean a rising trend for our profit. In terms of our profit margin, because of the fall in the hog prices, our overall revenue will drop. That is also good news and beneficial to greater expansion in terms of our profitability.
美国回答。
Shane and Glenn, can you take the question regarding Smithfield, please?
Yes, we will, Robert. In Smithfield, yeah, we finished very strong in the year with a nice recovery toward the end of the year, specifically in our packaged meats business. We are seeing the further recovery of food service as we begin 2022. We are seeing some increase in hogs, especially summer hogs in $120-$125, in the cutout holdings. We do expect to see some pressure on packaged meats as we move through specifically the middle part of the year. We do believe that our packaged meats for 2022 will remain strong and continue to grow, and we'll see profit levels within our realm of expectation.
非常感谢你刚才的提问。我们看到，过去的一年我们已经出现了强势的恢复，尤其到了2021年的年底的时候，当中表现最突出的，就是肉制品这个板块。同时，我们食品服务加上这个猪价，已经恢复到1.20到1.25这个价格的水平了。所以，我们相信这一些的因素，会为我们肉制品的业务带来一点的压力，尤其到了年终的时候，就更加的突出。但是整体说2022年我们肉制品的表现会是非常强势的，同时也会持续的增长，带来我们预期这个利润的水平。谢谢。
好，下面我们继续提问。下一个问题是来自于华兴资本的Charlie Chen。陈先生，您请开始。
好的，谢谢管理层给这个机会让我提问。我这边有两个问题。第一个问题呢，是关于原材料价格的，因为现在有可能我们看到包括大豆和玉米这些全球的价格有可能会上升，那我不知道就是公司在这方面有一些什么样的准备，然后同时这些价格如果上升了之后呢，对于公司在中国和美国的养殖和生鲜肉的业务方面，这个利润率或者是成本会有什么样的传导作用或者是影响？这是第一个问题。 第二个呢，是关于中国的整个养猪行业的问题。我们在2020年就是政府也出了一个规划，这个能繁母猪要保持在大约四千万头左右，所以我们看起来就是每一年现在猪肉的供应都会比较充裕。那在这种情况下呢，公司有没有发现，就是这一轮可能有一些养殖户在养猪可能不太赚钱的时候会持续退出这样一个现象，目前有没有发生？然后公司认为这个现象会不会以后发生？或者是因为现在整个猪肉养殖行业可能都已经被一些大的公司占据比较大的份额，所以基本上不太会有一个养殖户再退出的现象。所以从生猪供应的方面，可不可以跟我们讲一讲一个长期的趋势？谢谢。
Thank you very much. I have two questions. The first one is in relation to the rising costs of raw materials. We've heard news about rising prices for soy and corn. What kind of measures do you have to prepare for this situation? What about the slaughtering business in China and the U.S.? Do you think there will be any impact on your profit margin or on your cost in relation to your slaughtering business and also your fresh meat business? The second question is about the pig farming business in China. I have heard that the government stated that there should be around 840 million pigs in China per year, so the supply sounds very sufficient. Does that mean the company will not make much profit out of pig farming business?
Do you have any plans to exit this business, or do you feel that there are only a number of leading companies in the market securing your profit and therefore you will not exit this business? Can you share some insight in terms of your long term thinking?
我是万洲国际的行政总裁郭立军。我来回答您的第一个问题。那第二个问题呢，猪肉市场，中国猪肉市场的情况和供应啊，等一会儿让我们双汇发展的总裁马总给你回答。您看到的是对的，我们现在呢，这个原材料价格的上涨啊，是对我们造成了很大的影响。这主要表现在，一是粮食价格的上涨对我们生猪养殖成本的增加；二是能源价格的上涨啊，对我们的一些费用的增长。第三个呢，就是人工成本的上涨啊，对我们薪酬费用的这个影响。这三项费用啊，对我们目前呢，是面临的一些成本的一个主要的压力和挑战。那么我们在2022年的经营呢，我们主要是围绕着降成本、控费用、保增长、增盈利这四个工作来开展我们2022年的工作。
Thank you very much for your questions. I am Guo Lijun and I will take your first question, and I will leave the second question in relation to pork production to my colleague Mr. Ma. Your observation is very correct. The prices of various raw materials have been on the rise and that has created huge impacts on our operations. For example, the rising trend of the prices for grains have affected our cost on the feeds. Energy prices going up also means we have more expenses. The rising labor cost means we have to pay more in terms of salary. These factors do create pressure in terms of cost to our operations, and they do create certain challenges. Moving into 2022, in terms of our operations, we have a number of focuses.
We will focus on reduction of our cost, keeping a flat trend for our expenses and our fees, maintaining growth and increasing profit.
围绕这四项工作呢，我们采取六项措施来保障我们2022年这个经营的目标。一是啊，我们通过对冲和储备来平抑我们这个原材料价格上涨对我们的压力。二是呢，我们发挥产业链的优势来消化涨价的成本。第三呢，我们是利用全球产业布局的优势，发挥协同效应，增加我们产品的附加值。四是通过流程创新来提高劳效，降低费用。五是调整结构，扩大规模，提升市场竞争力，摊薄费用。六是我们要紧贴市场的行情，适时地调整我们的售价，转嫁成本的压力。
We will adopt six measures to ensure that our performance will be meeting our overall objectives. First of all, we are going to rely on hedging and sustaining a good level of reserve. Secondly, we are going to move upward on the value chain to consume the increase in cost. Thirdly, we will continue to leverage on our global footprint to achieve synergy. Fourthly, we will rely on innovation in terms of our processes so as to enhance overall efficiency. Fifthly, we will continue to enhance our overall structure and also expand our scale. Finally, we will stay very close to the market and make timely adjustments to our prices.
马总，你的第二个问题你来回答吧。
好，我来讲一下中国这两年的生猪产业养殖产业的一个现状。前几句话，前期受国家政策的影响，就国家政策大的支持，从2019年开始，相当一部分养殖企业规划了很多的新的产能，生猪养殖业扩张很快，这是一个现状，主要体现在2019年、2020年。这是第一个。第二个是受行情的影响，去年下半年以来到现在，猪价低迷，一些养殖业亏损严重，一部分新规划的产能或者取消。这现象也比较明显。第三个，部分大养殖企业受行情的影响或自身管理的原因，退出行业或者缩减了产能。第四个，大量的中小企散户的退出，助推养殖业的集中，集中化程度明显上升。第五个是国内整体存栏产能是稳中有升。
I will take the second question in relation to the pig farming industry in China in the recent two years. First of all, I would like to state that with supporting national policies during the early part, beginning from the year 2019, some of the animal farming enterprises have made new plans for new production capacity. There was an era of rapid expansion in this business. Because of what happened in the market, beginning from the second half of last year, we have seen a rather low level of hog prices, and we have seen some cancellation of planned capacity. Thirdly, some pig farming enterprises, for their own reasons, have decided to exit the industry and shrink their capacity level.
Fourthly, some smaller enterprises have also left the market, and we have seen a rising trend in terms of concentration in the industry. Finally, we believe the overall capacity of this industry is still growing.
我们现在还有继续提问的机会，请大家按照Zoom的提示示意举手进行提问。下面一条提问是来自于Jefferies证券的Kerith Chen，您请开始。
罗伯特，谢谢。能听到吗？
能听到。
你好，谢谢管理层选择我提问，我是Jefferies的Kerith Chen。那我持续刚刚两个问题，也提两个问题。那第一个问题是关于生猪产能这一块，那可以跟大家介绍一下我们现在在中国这一块的生猪产能，大概预期在什么时候会投入到这个生产当中，然后预期会对我们的利润方面产生一个怎样的影响。那第二条问题的话呢，是关于美国猪肉价格这一块，那我们预期这个来自于原材料成本的压力的话呢，可能会带来我们未来美国猪肉价格的一个怎样的变化？谢谢。
Thank you very much. I have two questions. The first one is about the fresh pork capacity in China. When do you think your full capacity will be commissioned, and how is that going to affect your profit level? My second question is about the U.S. Operations. How would the rise in the prices of raw materials create pressure to your operations, and how is that going to affect the business overall?
马总，你来说中国的生猪产能。好嘞。好，这个中国双汇的整体的生猪养殖规模是偏小的，我们的新产能从今年预计在八月份开始陆续形成，实际产能陆续投产，可能要持续今年的四年，但这个增速不是很快。对我们经营的影响，随着我们生猪产能出来的增加，我们对生猪采购的议价能力会有所提升，对我们的生猪原料成本的控制会带来正面的影响，会提升屠宰业的单头盈利水平。谢谢。
Thank you for your question. Allow me to tell you that, Shuanghui overall, slaughtering scale is on the smaller side. In relation to our new capacity, they will, by phases, be commissioned around August this year, and the growth pace is actually not very fast. With our slaughtering volume or hog production volume, I believe that is helpful in terms of enhancing our negotiation power when we do procurement work. I believe overall speaking, it is beneficial to Shuanghui's slaughtering business profit.
Shane, can you talk about business in the United States, please?
Sure. Robert. Actually, this is Glenn. I'll cover this question. It's as Gordon mentioned, there is a lot of inflationary pressure on the pork business right now, specifically in the U.S. in 2021. While we did see meat prices increase 35% throughout the year. Hog prices were up 54%, corn was up 64%, soybean meal was up 21%. Unprecedented inflationary pressure on our business. It's a good question. There's a few things, a few levers, if you will, that we can press on just to help mitigate the risk associated with inflation. One, we are vertically integrated. That business model is a competitive advantage. In 2021, our company-owned assets and hogs were actually cheaper than external hogs for several months throughout the year.
It allowed for us to provide for a lower cost supply chain. It also allows us to be a little bit flexible, so when market dynamics make it difficult to make money in our fresh pork business, we can adjust a little bit and manage volume to mitigate the risk of inflation. We have several operational improvement projects in effect that will help us mitigate and lower our overall cost in manufacturing. Those include SKU rationalizations, formulas, simplifications, and most importantly, redeployment of labor to the products with the highest revenue opportunity for the company. We've been very careful to analyze constantly where our labor ought to be deployed to optimize our profitability. There is the ability to adjust price.
It's not as easy as some would indicate or hope, but we, with these types of cost pressure and increases that we're feeling today and we felt last year, we are being induced to have to change our pricing to accommodate some of that. You know, pork and grocery, specifically in retail, is fairly price sensitive, and so we have to work with our customers carefully to make sure that we don't price ourselves out of the market. But again, we did find ourselves in a position where we were induced to adjust pricing last year to cover some of the inflation. Finally, our financial position.
We do have incredibly strong financial policies, and we've created a very, very strong balance sheet that allows us to tolerate inflationary headwinds like we saw last year, to manage the increase in working capital needed to buy and source these raw materials. That balance sheet remains strong through today.
好，非常感谢你的第二个问题。实际上你说得非常对，通胀带来的压力的确影响了我们的业务。在2021年的时候，我们在美国好多的东西都涨价了。举一些例子吧，肉类涨价是35%，然后猪价就是54%，玉米64%，还有一些大豆等等的东西，涨价是21%。这些东西都为我们的操作带来了巨大的压力。但是我们同时看到这些情况，也采取了一些措施来降低通胀带来的风险。第一，我们就是整合我们业务的流程。我们自己持有好多生猪的资产，它们的价格比外面的生猪是便宜好多的。所以，我们在供应链上就有了一个优势，因为我们的成本就可以压缩。同时，我们在必须的时候也可以做一些调整来管理好这些量。另外，我们在操作流程里面，其实也有好多方面的提升，我们有一些项目就是为了压缩我们的成本的，比方说我们在扩充这个规模的同时，要简化我们用一些的方程式。同时，我们在调配人手的时候就会看那时候哪一个板块、哪一条生产线带来的利润是最好的，然后我们就会把我们的人手调配到那些地方。其实要调价，不是大家心目中想象那么容易的事情，但是面对通胀带来的成本巨大的压力，我们现在也有了一个诱因去调整我们这些产品的定价。但是，我们要记住，猪肉还有一些零售的行业，还有一些平常需要使用的东西，一般大众他们对于那个价格的变动是非常敏感的，所以我们在调价的同时，要非常地谨慎去处理，希望不会因为调高了我们的价格，导致市场里面我们就失去了这些客户了。说到我们财政的情况，其实也是非常地稳健，因为我们内部有非常强势的一些政策来支持，同时我们资产负债表也是非常地健康，同时我们会持续地管理好我们工作的资本。谢谢。
好的，下一条提问来自于仁桥资产的夏俊杰先生，夏先生您请提问。
管理层您好，我想请教两个问题。第一个问题还是关于Smithfield这边的，因为其实刚才可能也讲到说，我们在美国这边，比如说这个养殖成本上涨了很多，就各种原材料。那其实我们看到美国的生猪价格也在不停地上涨。就我不知道，就是目前如果说单纯从养殖的角度来看，这个环节看，我们的养殖利润，现在究竟是一个什么样的情况，比如说我们的单头利润是一个什么情况。因为其实Smithfield我觉得大家可能一直对这个业务猜得不会特别清楚，就是投资人这边。那因为直观的感觉上应该说，如果作为一个整体的话，它其实是一个上游，还是因为我们的生猪养殖的规模是比较大的，所以它是一个上游，其实占比更大一点的。所以我不知道，就是如果美国未来比如整个的通胀形势，那么生猪价格出现比较继续出现大的上涨的话，会不会整个就是Smithfield的整体利润还是会提升的？这是我想问的第一个问题。那第二个问题，是关于我们万洲国际的回购问题，因为其实去年我们也做过一次比较大规模的回购，虽然其实股价最终可能表现并不太理想，但是实际上我觉得这次回购也表明了整个我们管理层对上市公司的一个信心，因为我们大股东是没有参与那次回购的。那么我不知道，因为现在其实股价确实包括市值也比较便宜。那么今年的话，我们还有没有比如说回购的一些计划，或者说可能一些方法上的改变，比如说我们直接从二级市场或其他的一些方式。就这两个问题。好，谢谢郭总。
I have two questions. The first one is in relation to Smithfield. We understand that cost is rising and raw material prices are also going up in the United States. At the same time we see a rising trend for hog prices. Does that mean you are still looking at a very good profit level for per unit hog production? All along, many analysts feel that we are not very certain or clear about the details of the business for Smithfield. Our general feeling is that perhaps it is more related to the upstream, because you mainly do large scale hog production. In the future, if hog prices continue to rise, does that mean you will see a rising overall profit level at the same time? My second question is about buyback. Last year there was a large scale buyback of the shares, and our stock performance stock price performance was not satisfactory, but at the end, it did reflect the level of confidence coming from the management, because major shareholders did not participate in this buyback exercise. Do you have any plan to buy back the shares this year? What is the actual operation? Are you going to consider buying back from the secondary market?
Shane and Glenn, please take the first question regarding Smithfield.
Yes, I'll tell you that, Robert. To the point of rising costs, as Glenn said previously, we are facing inflationary pressures across all aspects of our business. One of the things that we have that is unique is the level of vertical integration we have. When we talk about vertical integration, think about that from hog production through fresh pork and into packaged meats. As we see volatility in different parts of the business, if that model is behaving and run correctly, we would see correlating offsets in other parts of the business. To hog production, yes, we will see, as I mentioned a while ago, we're already seeing second and third quarter hogs or summertime hogs already $120-$125, so we will see better pricing opportunities on the hog side. The offset to that also is seasonally we typically see a slightly weaker fresh pork market during that same time frame. Right now, I think the dynamic we're seeing is a combination of shackle space versus available hogs. There is, as the industry knows, some disease risk out there. As we move forward through 2022, I think we'll see the benefits of the vertically integrated model and the compensating P&L aspects that create some consistency in this business.
非常感谢你的问题。你刚才也说到了，各方面的成本上升呢，的确是为我们的操作带来了压力。因为在我们方方面面都看到通胀的问题。所以呢，在这个情况底下，我们就很好地依赖我们垂直整合的这一个营商的模式来抵抗这一些通胀带来的压力的。因为我们垂直的工作当中就包括了这个养殖，然后呢也有新鲜肉的销售，然后也有肉制品。这一个模型呢，如果操作良好的话，其实就可以非常成功抵抗这一些上涨的成本。另外，在我们生猪的价格在第二季呢，也就是我们的夏季，通常呢都会带来一些很好定价的机会的。在第二季度呢，我们看到这个猪价已经有一个转好的势头了。那同时在这个季度当中呢，新鲜肉这一个周期呢可能就会转弱，这是历史上一个季节性的情况和现实来的。整体我们看2022年呢，我们相信从这个垂直的整合的营商的模式会看到更多的好处会显示出来。谢谢。
好，我来回答。我是万隆啊，我来回答你关于万洲的回购。这个去年呢，我们回购了43%的股份，付出了19亿3千万元的现金。这个今年呢，我们还没有回购的计划，当然我们要看这个股票的情况啊，到时间如果变化的情况需要回购时，我们会考虑啊，不需要回购时，我们可能就不考虑了。
Allow me to respond to your second question about buy back. Last year we bought back 13% of our shares and the cash consideration was $1.93 billion. This year, at this moment, we do not have any plans to do a buyback of the shares. Of course, at the end of the day, we have to see how the stocks are performing. If we do see a need to do buyback, we will consider it at the time and vice versa. Thank you.
下一条提问是来自于新思路投资的Hugo沈。沈先生，您请开始提问。
谢谢管理层，请问可以听到我吗？
可以。
谢谢。我想请教两个关于双汇在4Q的问题。第一个是想问一下毛利率方面，因为做了这个会计调整，所以想问一下可不可以介绍一下在这个会计调整之前，双汇在4Q的这个毛利率的水平是多少，然后这个和前一个季度或者年对年的这个变化，这个原因是什么？这是我的第一条问题。第二条问题是想问一下，看双汇在4Q资产减值损失有一个正向的冲回，想问一下这个是什么内容，然后这种冲回未来几个季度是否还会再出现？谢谢。
I think.
这个问题
I have two questions. The first one is in relation to the gross profit level. I would like to ask about the year-on-year trend or period-on-period trend before the accounting adjustments were made. My second question is in relation to the impairment for the assets. Can you tell us more context about this reversal of the impairment?
刘总，您说话。
刘总来回答。好。
我是双汇发展刘松涛，我来回答这两个问题。一个是毛利率的问题，这个是按照中国财政部的要求，与这个销售产品相关的运输费用，由原来的计入企业的销售费用改变为计入企业的销售成本。也就是说我们2021年和2020年，都是这两期，分别把这个当期的销售费用转入了到销售成本，这对毛利率有1.3个点左右的、接近两个点的影响。其中，2021年有十二亿的运输费用，2020年有十亿的运输费用进行了这个调整，这是对毛利率的影响的原因。那么第二个问题，就是报告期的Q4，我们对减值有一个冲回，那么这个冲回的原因，就是在Q3的时候，猪价和肉价比较低的时候，公司计提了存货跌价的准备。在Q4，随着这个猪价的上升、肉价上升，亏损减少之后，对这个原来计提的减值进行了这个冲回，是这样的一个行情变化的原因造成的。谢谢。
Thank you for your questions. I'm Liu Songtao. I will answer both your questions. Your first question was in relation to gross profit. According to the requirements stated by the Ministry of Finance in relation to the transportation cost attached to the sales of goods, originally that will be booked under sales expenses, but under the new arrangement, they will be counted against sales cost. For the sales expenses for 2021 and 2020, we are talking about an impact of about two points to our gross profit level. The relevant transportation cost for the two respective years, 2020 was $1 billion and 2021 was $1.2 billion. Now for your second question, in relation to the reversal of impairment in Q4. Basically it was done because of what happened in the market situation.
In Q3, the hog price and meat prices were rather low, so we did the impairment in advance as a kind of preparation. In the following quarter, we saw rising trends for both prices and therefore we reversed the impairment.
各位分析师朋友，我们现在还有继续提问的机会，请大家按照……下面一条提问来自于慎知资产的余海峰。余先生，您请开始。
啊，你好，还听得见吗？
听得见，请讲。
哎呀，这个今天的网上会我第一次有机会能够提问，特别荣幸。以前就是也听一听的。那个其实我的问题是关于公司回购方面的问题，刚才这个万老板已经讲过了，今年可能是没有考虑做回购，但是在这个里面呢，我还是想跟老板和董事会建议一下，其实我们完全可以模仿其他的公司，比如像腾讯这种，每天买个一两千万元，这种。就是其实比我们那种集中的回购成本要低太多了，而且也有利于公司的现金流的摆布，包括流程，包括对投资人的信心，更关键的就是你的成本还低。比方说你上一次比这个收盘价一下了至少15%吧，但是你如果每天就花个一两千万回购的话，其实就是市价，何乐而不为呢？现在双汇这个万洲不到500亿的市值，其实我觉得太有太多的东西值得我们去反思了。好，我的问题就这个。
Thank you very much for this opportunity. This is actually the first time I get the opportunity to ask the question, so I feel very honored. I understand the chairman already said that there is no plan at this moment for share buyback this year. Allow me to make one suggestion to the board, why not do something like $0.10? Buy back your shares every day, a little bit every day, perhaps $10 million-$20 million. It is much cheaper in terms of the financial cost. It is going to be very good to your cash flow and you have more flexibility to enhance your procedures. At the same time, it will boost investors' confidence in the company. Perhaps that is one suggestion you can consider. In fact, there are simply too many things we can reflect upon.
于先生，你这个建议很好，有条件我们会考虑。
That is an excellent suggestion and we will definitely give some serious thought to it.
我们现在还有继续提问的机会，请大家按照提示举手进行提问。下面一条问题来自于安信证券的Gloria。您请开始。
管理层好，能听见我的声音吗？
可以非常清楚，请讲。
好的，谢谢给我这个提问的机会。那么我的问题主要是关于国内双汇这一块的业务。我看到，根据我们这个肉制品的销量，我大概算了一下，我们大概2021年整个肉制品的单吨售价，其实是较2020年是有所提升的，并且每个季度其实价格都是维持在一个比较高的水平，然后单吨利润呢也是有进一步的提升。那么未来的话，在猪价下行的时候，我们是否会考虑降低我们这个肉制品的售价。或者说是，从利润端的角度来说的话，虽然猪肉的价格会下降，那么我们终端售价如果考虑下降的话，是不是会影响我们的毛利润？不知道管理层是怎么样考虑这个关于定价的问题的。另外我也想问一下，我们这个肉制品方面新品销售的情况，以及它在整个收入中的占比。谢谢。
好，马总，你们谁说？
关于这个肉制品单吨销量和单吨利润的问题，大家看到了一个事实，这几年我们一直坚持肉制品的两条一控。两条就是调价格、调结构，控就是控成本。调价格大概率我们是往上涨，一般情况下我们是不会降价的，除了个别单品有偏离严重的会调整。所以随着猪价的下降，我们大概率不会降价。不会降价带来的毛利空间，我们会转变为三个方面：一个是改善产品的品质，提升产品的竞争力；第二个是加大市场的投入，参与市场竞争；第三个留给我们利润。所以今年在这种情况之下，今年猪价下降，我们的单吨价格应该是稳中有升，单吨利润也维持在较高水平，预计全年在¥4,000元左右，保持去年四季度的水平。
呃。
还请翻译。
I would like to ask two questions and they are mainly about the business of Shuanghui in China. Concerning the sales volume of packaged meat, I can see that the price per ton in 2021 is higher than that in 2020. Each quarter we also see rather high level of per ton prices.
Also a rising trend for per ton profit level. When hog prices come down, are you going to consider reducing the packaged meat product prices? Because when meat prices drop, it will have certain impact on your gross profit, correct? How do you actually decide on your pricing strategy? The second question is about the sales situation for your new products and what kind of contributions are the new products making. The answer is that when in terms of the packaged meat per ton profit and also the sales price, in recent years, we have been insisting on this policy of two adjustments and one control. The two adjustments are for our prices and also structural adjustment. For the control measures, we are talking about our cost.
When we adjust upward of the prices of our products, it means that we will not later on adjust downward of the prices. The falling trend of the hog prices does bring certain room for improvement of our gross profit, and we will use that opportunity to achieve the following tasks. First of all, we will enhance the product quality so as to enhance our competitiveness. Second, we will enhance level of market investment. Thirdly, we will keep the benefits as a profit for the company. With the falling trend of the hog prices, we will continue to see a rising trend for the profit level of our packaged meat.
To answer your second questions about the performance of our new products. Last year, there were three new items launched into the market, enjoying an overall sales volume of more than 10,000 tons. Seven items were sold over 5,000 tons. The average sales price stood at $28,000. Compared to the average sales price of packaged meat, it is actually $8,000 higher. The proportion of contribution from new products in 2021 was 9.5%. This year, we expect that to grow to 10% or 10.5%.
Hey, thank you, Robert.
I just have one simple follow-up question. We can see that in Q1, the U.S. hog future prices have been increasing rather rapidly. What will happen to the overall profit margin this year, considering the latest movements in the market? Can you also share some insights in relation to what you expect will happen to the hog prices throughout this year?
Glenn, please.
Sure, Robert. This is Glenn. I'll take that. You're correct. The futures prices for hogs have been increasing pretty steadily in 2022. I'd like to remind you as well that along with those hog cost increases, hog price increases have been grain and feed cost increases. Although it does, if tracking only selling price, mattered, it looked like there should be more profitability, but the cost to produce is increasing in the U.S. as well. The other thing to note is there's been a pretty significant tick up in disease rate in the U.S., not just Smithfield, but in the industry. There's been fairly sizable mortality as a result of that disease. It's being managed. There is incredible biosecurity in this country with respect to hog production.
At the end of the day, some disease is very difficult to manage. There has been in the USDA and U.S. government put out some data that showed that pork production, pig production should be down for the first time. I think that's what's created this bullishness in the futures market. Our outlook for hog production is very similar to last year, whereas we will see pretty good profitability in the summer months, but our raising costs in Q1 and Q4 exceed our selling price there. We expect to generate losses Q1 if we rely solely on the futures market, the outlook for Q4 is a loss as well. The profitability looks as we sit here today, it's very, very volatile. Very volatile this year.
As we sit here today, the profitability looks consistent with that of the prior year.
好，感谢你的问题。你刚才说得非常对，我们看今年这个猪肉的期货价格呢，的确是很明显地上升了好多。但是我要提醒你们呢，在这个猪价的背后，为什么它会上涨呢？其实就是因为好多的原材料、饲料，还有一些谷类的东西，它们的价格也在同时地上升。所以呢，有时候如果你只是追踪这个销售的价格的话，可能你就会忽略了背后一些成本的上涨。同时呢，我们看到另外一个困境呢，就是因为那个疾病发病率有所增加，这一情况不单单是我们公司，整个国家不同的养殖的行业，他们同时都需要面对的，就是今年这个生猪他们的死亡率，因为这一些的疾病非常难去控制，所以呢，他们的死亡率是有所提升的。其实在美国呢，我们生物安全这一边的工作已经做得非常的严谨，但是好像我们疾病控制中心也说到了，涉及到养猪行业，的确有一些的疾病呢，要100%的控制是很困难的。因为政府宣布了一些数字，就是说这个养殖业的数字，出栏的数字会下降，所以呢，就马上拉高了这一期货的价格。我们对于2022年整体的估计呢，跟去年基本上是差不多了。市场的波动非常的厉害，但是在夏天几个月呢，我们相信那个利润的水平还是挺好的，但是到了Q4呢，应该就有一些的亏损。谢谢。
Furthermore, with respect to our input prices in hog production, we have several tools and processes we use to help manage the rising costs of corn and soybean meal and feed costs in general.
Hedging is one, but we also have the ability to procure grain from various parts of the U.S., and we also have the ability to source grain from outside the U.S. We will continue to look for ways to optimize our feed costs and to mitigate some of the inflationary risk. The other point though, as Shane indicated earlier, is we are vertically integrated. If we do see an unusual or unexpected spike in price or cost in the hog production side, we do have some flexibility in our fresh pork and packaged meat side to absorb some of that. We can be a little bit flexible with our processing rates at various points or geographies around the U.S. to accommodate sudden shifts in pricing. We could again try to find the highest and best use of our labor to try to optimize the fresh pork spread and profitability. We'll just as they're doing in China, we will try to convert as much commodity pork into value-added product where we experience and generate our highest margins. Again, as we sit here today, it's been a very, very volatile hog market or hog market as far as sales price goes. We've seen similar volatility in corn and grain around the world. We will do what we've always done to mitigate that price risk and take advantage of our vertically integrated model.
另外我想补充的呢，就是我们看到这个养殖业啊，不同的成本都有上涨的趋势，但是同时我们公司呢，是有一些的流程，还有工具来应对的。首先我们会进行对冲。第二呢，就是我们有办法从美国不同的地方去采购这些的谷物的。同时呢，也有部分这些的原材料，我们有办法从美国以外的地方去采购回来。另外一个非常重要的一点呢，就是因为我们公司有垂直整合的这一个模式，所以呢，我们在其中的一个板块当中看到有一些的价格上升的同时呢，我们马上就可以在别的地方进行一些的调整，比方说我们可以找一些利润比较高的岗位，调配我们的工人。同时呢，我们也会把这个大众商品猪肉转为一些增值的产品。这些的措施呢，都是非常有效的，可以帮助我们在这个高度变化、波动非常厉害的这一个生猪市场里面可以应对和降低相关的风险。谢谢。
好，各位投资者、分析师朋友，万洲国际2021年业绩交流发布会会议到此结束，谢谢各位的参与，我们下次再见。