Good evening, dear friends. This is Guo Lijun, CEO and Executive Director of WH Group. Welcome to attend today's earnings release for WH Group of the first nine months of 2024 . Attending today's meeting, we have representatives, senior management from WH Group, Smithfield Foods, as well as Morliny Foods. Today we have Vice Chairman of the company, as well as Chairman of Shuanghui Development, Mr. Wan Hongwei. Executive Director of the company and CEO of Shuanghui, Mr. Ma Xiangjie. Executive Vice President and CFO of Shuanghui, Mr. Liu Songtao. Executive Director and CEO of Smithfield, Shane Smith. CFO of Smithfield, Mark Hall. CEO of Morliny Foods, Luis Cerdan. CFO for the company, Joanna Yan. Vice President of the company, Zhou Xiaoming.
This is CEO as well as Executive Director of WH Group. I will firstly walk you through the performance of the company in the first nine months, and then we will open the line for Q&A. Dear friends, let me walk you through the consolidated financials of the first nine months of 2024. In the first nine months, the total packaged meats sold was 2.28 million metric tons, year-over-year decline of 4.4%. Pork sold volume was 2.7 million metric tons, year-over-year decrease of 7.6%. Total revenue was $18.8 billion, year-over-year decrease of 3.2%. EBITDA of $2.25 billion, year-over-year increase of 38.9%.
Operating profit $1.79 billion, year-over-year increase 71%. Profit attributable to owners of the company $1.08 billion, 90% increase compared to last year. Basic EPS $0.0843, 90% increase compared to last year. In the first nine months of the year, our revenue declined slightly compared to last year, but our profit has improved substantially. In terms of the different segments, packaged meats contributed to 52.5% of our revenue and 93.8% of our operating profit. It is our core business and the main contributor of our revenue and profit. Pork business represents 40.1% of revenue, 12.3% of operating profit. Others contributed 7.4% of revenue and a -6.1% of operating profit.
If we look at the profits and revenue by region, China represents 33% of revenue and 40.6% of operating profit. U.S. and Mexico contributed to 52.5% of revenue and 46.9% of operating profit. Europe business is 14.5% of revenue and 12.5% of operating profit. So the North America is our major revenue and a profit contributor, followed by China. In the first three quarters of 2024, hog prices in China increased due to lower hog supplies. In the U.S., performance hog production business improved significantly as hog price rebounded slightly and the feed prices fell substantially. In Europe, hog prices fell from high levels as hog supplies began to recover.
The number of slaughter hogs in China decreased by 3.2% to 520 million heads in the first nine months of 2024. The average hog price in China was CNY 16.9 per kg, an increase of 9.7% year- over- year. The number of processed hogs in the U.S. increased by 1.2% to 95.2 million heads in the first nine months of 2024. The average hog price was $1.41 per kg, up 1.3% year- over- year. In Europe, the average hog price was EUR 1.62 per kg, down by 8.1% year- over- year.
In the first nine months of 2024, the average pork cutout value in the U.S. was $2.11 per kg. So the pork prices, the meat prices increased faster than the hog prices. The market spread has widened, which is beneficial to our fresh pork business. In China, the first nine months operating profit was $729 million, year- over- year, declined by 7.5%. The packaged meats profit was $724 million, increased by 4.2% compared to last year. The pork business operating profit was $41 million, year- over- year, declined by 30.5%. In China, our packaged business maintained a stable, a steady growth.
In North America, the operating profit was $841 million, which is 589% increase compared to last year. Packaged meats profit was $854 million, increased by 11.6%. Pork profit was $80 million, and it turned profit from a substantial loss last year, so the delta was $600 million. In U.S., our packaged meats maintained a steady profit growth, and the pork business has turned from a substantial loss to a profit. In Europe, the operating profit was $225 million, increased by 64.2%. Packaged meats operating profit, $105 million, 50% increase compared to last year. Pork business, $100 million profit, 64% increase compared to last year.
So all the business in Europe has exhibited strong growth. In the future, WH will continue to consolidate our global resources, adhere to the adjust the price, improve mix, and a control cost philosophy, leverage our strengths, industrialization, scale, and diversification, and continuing to maintain our leading market positions to achieve sustainable development. In China, we will continue to seize the channel transformation, manage markets in innovative manner, accelerate industrialization products of Chinese-style products.
Fresh meat products will leverage this advantage in brand, nationwide presence, vertically integrated business model, and sales network, optimize operations by incorporating fresh meat by considering fresh meat and frozen reserve, domestic production and imports, transfer fresh meat across different regions based on market dynamics, actively participate in market competition. We will also improve the management capability and the profitability of hog production and poultry business. We will also accelerate the double sales network initiative to promote channel innovation and transformation, upgrade the digital management of stores to facilitate channel transformation, achieve a breakthrough in sales volume. In the U.S., we'll continue to optimize the business structure, reduce hog production capacity, and reduce production costs, focus on developing packaged meat business, optimize the product mix, drive volume growth, while maintaining strong profitability.
In fresh meat, pork will improve profitability through efficiency improvement, sales channel optimization, and adding value to product portfolio. We will also accelerate scientific and technology innovation, optimize supply chain management, 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 the by-product yield and value. We will leverage integrated business model, accelerate development of poultry business. We will also integrate newly acquired business and identify investment opportunities to further strengthen its business footprint. So that's all for the first nine months results. Thank you. We'll now move on to Q&A.
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So three questions from the analyst from Citigroup. The first question relate to the U.S. hog production business. So, as we have seen the substantial improvement in the results in the first nine months for U.S. hog production, how much of this is driven by market, by the cycles, and how much is driven by the benefits from the structural reformations or the various reformation measures that the management has taken on the hog production business? The second question relates to the U.S. packaged meats business. We have also seen improvement in per metric ton profit. What are the reasons behind these improvements and how much room do potential do we have for further improvement? And thirdly, what is the progress of the Smithfield spin-off IPO?
Have you obtained approval from the Hong Kong Stock Exchange? Is there a timetable or any latest progress?
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Maybe we'll suggest to have Shane and Mark to take the first two questions.
Yes, I'll address the hog production question. So yes, our hog production business has really improved over 2023. For the third quarter of this year, we were profitable, actually at a level of about $11 a head. To your point, we have seen commodity markets come down. Feed costs are down about 30%. But I would tell you a bigger part of that, as well as also the inside-farm improvements we've done. So we are in the middle of year four of the five-year genetic changeover, which has had a dramatic effect on our cost structure. We've also improved our health, and so our health across the business is much better today than it has been historically.
And finally, as it relates to feed costs, we've done a number of things to mitigate our exposure in the feed cost side of our business. So three of those things, coupled with overall raising cost improvement, primarily from the normalization of corn and soybean meal, have had a dramatic impact on the results this year.
I'll take the packaged meats.
Do you need to translate?
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On the packaged meats question, as you noted, the packaged meats business continues to perform exceptionally well, and it's really a function of our strategy and executing on Chairman Wan's management techniques of Two Adjustments and One Control. So it's really about price, mix, and continually improve our structure. You know, on a year-to-date basis, our average selling price is up about 3% as we continue to take price, as necessary in terms of offsetting inflation. We've also been able to continue to improve our mix, and so shifting our product mix to the higher value-ended spectrum of our categories. So things like dry sausage and smoked sausage and Nathan's hot dogs, which have a higher index.
It's also about improving our operating efficiencies within the four walls of our plants and also in our supply chain. Working to more than offset inflationary pressures, whether they be wage inflation or supplies inflation, with cost savings programs through automation, and repositioning employees within the plant to focus on higher-yielding, higher-value products. It's really been successful for us in these inflationary times.
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[Foreign language] So with respect to the third question, related to the progress of Smithfield IPO, due to the restrictions of U.S. securities regulation and certain restrictions in the Hong Kong regulations, we are not able to provide further updates beyond the announcement we have made in July about the Smithfield's spin-off IPO.
We'll certainly update the investors in the course.
[Foreign language]
So two questions from UBS analyst. The first question is about the outlook of hog prices in both China and U.S. So what's the management outlook of hog prices in the fourth quarter of 2024 as well as 2025 in both China and U.S.? The second question relates to China's packaged meat business. So we have seen the performance of packaged meats business in China stabilized in the third quarter versus the second quarter. So what's the latest observations in the October volume? And what's the outlook for fourth quarter volume and profit per metric ton?
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So, to answer your three questions related to China, the first on the outlook for the fourth quarter hog prices in China, we think the fourth quarter hog price will be significantly lower than in the third quarter based on our observations in the current herd size and market. And we also think that the hog prices will be trending down in each of the three months of the fourth quarter. With respect to 2025 outlook, we have three views. The first is the full- year hog price will be lower than that in 2024. Secondly, it will fluctuate, but overall trending down, which means the hog prices will be relatively higher in the first half and lower in the second half. And the third view is that we think the overall volatility would be lower than this year.
In terms of the packaged meats volume, based on our observations in October, as well as the fact that last year we have a low base, we think the fourth quarter packaged meats volume in China will have a significant increase year- over- year.
[Foreign language] CEO Shane Smith [Foreign language]
Shane, maybe you take the question related to outlook of hog pricing fourth quarter and 2025.
Yeah. Thanks, Xiaoming. Unfortunately, we can't give specific guidance at this point on where we think the markets will be, but we can point to the futures market. And what I would tell you is we are seeing the normal seasonal trends where we see lower prices in Q1 and Q4 and higher prices in Q2 and Q3, but you can look to the futures market. It's really a great indication of where we think prices will be not only in the fourth quarter of 2024, but as we look across 2025 as well. So, a return to more normalized markets with that same seasonal aspect that we anticipate seeing or expect to see as we move throughout the year.
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Two questions from analyst from CITIC Securities. The first relates to China's packaged meat business. We have seen steady profit improvement in the packaged meat business, but we also notice that the volume of the business is decreasing, which means the improvement in profit is driven by per metric ton profitability. And we understand the volume decrease to a certain extent is driven by the weak consumer demand. And we want to know from a company perspective, other than waiting for the market consumer demand to recover, any measures were taken to to drive the sales volume growth? And given we already have a relatively high per metric ton profit, what are the potentials in further increase in the profit per metric ton? Second question relates to the U.S. hog production.
We have noticed a good profitability in U.S. hog production in the third quarter of 2024. What's the company's outlook for U.S. hog production profit in the fourth quarter and 2025?
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And on the first question, also wanted to ask the U.S. management the same question, because it's a similar trend where the volume has decreased, even though the profit, overall profit has improved.
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So on the packaged meats business in China for the fourth quarter, we think, as already explained earlier, we think that given our observations in the market, given the relatively low base in 2023, as well as various measures we have taken, we are expecting good growth in the packaged meats volume in the fourth quarter. In terms of the profit per ton, we think it will continue to maintain a high level because the cost structure is still favorable, but they may be lower than third quarter because third quarter is a very good season for packaged meats business, and we have very good product mix.
We think in 2024, in the fourth quarter, the profit per ton will be lower than third quarter, but will improve compared to last year. For 2025, we expect a single- digit growth in volume, and given the cost is expected to continue to decrease, we think the profit per metric ton will continue to be at a very high level from a historical standpoint.
[Foreign language]
And Shane, maybe you take the next question. Our next two questions. One is similar to, to Shuanghui, which is the packaged meats... What measures were taken to mitigate the decrease in packaged meats volumes? And also, what's the outlook of hog production profit in the fourth quarter in 2025 ?
Yeah, and I'll start with the hog production question. And again, unfortunately, we're not in a position where we can give guidance. But again, I'll point to the seasonal trends that we typically see in Q1 and Q4 versus Q2 and Q3. You're right, in our third quarter, we were $38 million of profit, which is about $11 a head. On a year-to-date basis, our head was a loss of about $12, versus $52 in the prior year. And so using the futures strips, looking at what we expect for the fourth quarter off of the futures market, both from a raising cost perspective and from a pricing standpoint, I would tell you that the fourth quarter, our raising costs look better than the fourth quarter of last year, and sales prices look better the fourth quarter of this year versus the fourth quarter last year. And both of those point to better profitability in Q4 this year than we saw last year.
[Foreign language]
Generally, relative to the packaged meats industry in the U.S., it's really been driven, the volume slowdown has been driven by two primary forces.
One is high food inflation and the other is the reduction in certain government support programs or assistance programs for poor consumers. So in the most recent reporting period, food away from home inflation, so the food service channel for us was up about 3.9% year- over- year, while the retail prices were up about 1.3%-1.4%. So, a slowdown, a definite slowdown across the industry in terms of food service and dining away from home, and we expect that to continue into the fourth quarter. But again, we've been able to maintain margins through a very disciplined approach to price, mix and cost management. We are coming up with a number of innovative new products to meet that consumer wherever they're at within their price portfolio, whether it's a value proposition, a more mid-tier or a value-added product. So again, we expect to see a turnaround, but it's going to be, I would say, sluggish through the fourth quarter.
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Three questions from analyst from Macquarie. The first relates to the company's dividend. Last year, despite the relatively weak results, the company still maintained good dividends. This year the profit has improved quite significantly compared to last year. What is the company's dividend outlook? Because we understand historically, the dividend payout ratio based on net profit has fluctuated, sometimes 30%, sometimes higher. We wanted to ask a bit more about the outlook of dividend. Second is about, the second and third question relates to the European business. In Europe, we noticed the packaged meats business profit per metric ton is much lower compared to the U.S. and China. What measures were taken to try to narrow that profit per metric ton gap versus the U.S. and China business?
Thirdly, we understand the management discussed earlier that in Europe will be looking identify acquisition opportunities. Are there any specific opportunities or the company has any directions?
[Foreign language]
In terms of the dividend, as you know, WH Group very much focuses on shareholder returns. In 2023, even though our U.S. business has been heavily impacted by the difficult market, and we still maintained our dividend to the shareholders. This year, the market has recovered and our business performance has also improved. We already increased our interim dividend. So we believe as we continue to improve our business performance this year, from the company's perspective, we are willing to and also have the capability to increase, potentially increase dividends to the shareholders. Because we very much focus on the shareholder returns.
[Foreign language]
Maybe we'll have our CEO of European business, Luis Cerdan, to take the next two questions related to the packaged meats as well as acquisitions.
Good morning, everybody, and thank you for the question. Related to the packaged meat profitability per ton, if you see the results already of this year, our profitability per ton improved by 43%. This is the work done in the same direction of the company working with the mix, especially our products, the categories and the channels that we are working, the focus in the price management for saving initiatives that we are developing. This already improve the profitability this year, and we have a plan for the next year to close the gap with USA and China. Could you translate for me?
Yeah, so in terms of the packaged meat business in Europe, as you can see, we already has made improvements in terms of profit packaged meats per ton, in the first nine months of this year compared to last year. As a result of our the improvement in the product mix in the channels.
[Foreign language]
Related to the M& A, our focus is in packaged meat companies and poultry and to increase our poultry business too. This is the main key areas that we are looking for opportunities to growth our business in Europe.
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