Dear analysts and investors, dear friends, good evening. Welcome to the 2024 results announcement by WH Group. Today we have with us from the management, our Group Chairman and Executive Director, Mr. Wan Long, Executive Director and CEO Mr. Guo Lijun.
Lijun.
Vice President for WH Group, Chairman of Shuanghui, Mr. Wan Hongwei, Executive Director and President of Shuanghui, Mr. Ma Xiangjie, CFO Madame Uncertain , Executive VP and CFO for Shuanghui, Mr. Liu Songtao. I am Vice President Zhou Xiaomin. We also have with us online, representatives from Smithfield and Morliny. We have Mr. Shane Smith, CEO, and Mr. Mark, CFO, and Mr. Luis Cerdan, our CEO for Morliny. We are going to divide this briefing into two parts. We will hear the first financial summary and business review and then we are going to answer your questions. First, I will pass the time to Mr. Guo to take us through the performance highlights. Mr. Guo,
investors, analysts, good evening. I'm going to report to you the financial summary of WH Group in 2024.
In 2024 Packaged Meat sold 3.1 million tons, a drop of 3%. Pork sold 3.765 million tons, a drop of 4.9%. Revenue $25.941 billion, down by 1.1%. These data are before Biological Asset Fair Value Adjustments. EBITDA realized $3.078 billion, an increase of 56.1%. Operating Profit $2.4 billion, up 63%. Profit Before Tax $2.208 billion, up 115%. Profit Attributable to Owners of the Company $1.471 billion, up 142%. Basic Earnings Per Share 11.47 U.S. cents. Our sales volume dropped slightly and profit grew very substantially. Based on our cash flow situation and operations, the board decided that there will be a Final Dividend Per Share, HKD 0.4 together with HKD 0.1 as Interim Dividend. The whole year will be HKD 0.5, which is HKD 825 million in total and 51% of Attributable Profit. After endorsement by the board on 9 May, it will be distributed to our shareholders in 2024.
Packaged Meat contributed 52.6% of our revenue. It is still our core for our pork business. 40% contribution of our revenue and 14.8 of our profit for others, 7.5% contribution to revenue total loss $186 million. That includes our headquarters. Revenue by segment. China contribution 32.5% towards revenue and 39% towards profit. North America 53% contribution of revenue and 49% of profit contribution. Europe 14.5% contribution towards revenue and 11.4% towards profit. Cash Flow and Capital Structure we continue to optimize both of them. In 2024, we had strong Operating Cash Flow. We realized Operating Cash Flow at $2.519 billion, up 55.8%. Our Capital Expenditure $707 million, down by 12.9% this year. We believe Dividend Payout will be about $825 million, enhancing greatly Return for Our Shareholders. Our Leverage continues to stay at a rather low level.
Towards the end of 2024, Interest Bearing Debt, the Leverage Ratio 0.29 which is continuously at a rather low level. Now let's move on to our Business Review. The Global Economic Recovery was slow and uneven, further strained by ongoing Geopolitical Tensions. Inflation steadily moderated, alleviating Cost Pressure on businesses and Central Banks began gradually easing Monetary Policies. Oil Prices in China increased due to reduced Stock Supplies. Effective Demand from customers is not very strong. In North America, Market Environment for the Pork Business improved as Feed Prices declined, Hog Prices rebounded and Market Spreads widened. In Europe, Feed Costs decreased and Hog Prices fell from high levels as Hog Supply recovered. WH Group leveraged its Global Platform and Vertically Integrated Business Model, promoted Efficiency Improvement and Cost Control and optimize its Business Structure, leading to a Significant Improvement in its Operating Performance and Record High Profits.
The number of slaughtered hogs in China decreased by 3.3% to 703 million heads in 2024. At the end of the year, Hog Inventory in China was 427 million heads, down 1.6% over the end of 2023. Lower Inventory, less slaughtered, and the Average Hog Price was RMB 17.04 per kilo, up by 10.6%. Number of slaughtered hogs in the U.S. increased by 0.6% to 128 million heads. The Average Hog Price was $1.42 per kilo, up 4.5%. In Europe, the Average Hog Price was EUR 1.59 per kilo, down by 7.9% also because of Higher Supply and therefore driving down the Hog Prices. Corn Prices in the U.S., the Average Level was $4.27 per bushel, down 23.3%. Average Pork value in the U.S. was $2.11 per kilo, an increase of 6.5% from 2023.
Industry Market Spread widened as Pork Values outpaced hog prices in the market and that is beneficial to our operations. China we realized Operating Profit RMB 943 million, down by 0.5% mainly because of Depreciation of Renminbi and Exchange Losses. Margin 11.2% among which Packaged Meat RMB 924 million Operating Profit Margin 27.1%, Pork RMB 55 million up by 1.9%, Margin standing at 1.3%. We adhere to the principle of Improve Mix, Adjust Price and Control Costs amid a market environment of insufficient demand and increased competition. Second Half Results improved despite the headwinds and we maintained stable performance for the full year. Packaged Meat we achieved Record P rofits due to effective control of our cost. Number of Point of Sale and Sales Volume in New Channels grew rapidly for Pork Business. We stepped up efforts to develop New Customers and Sales Network.
Sales Volume improved significantly in the Second Half and Profit remained stable thanks to Reserve Strategy and Core Channels. As for Poultry Business, we continue to enhance Operations and our Quarterly Results improved sequentially. North America we realized $1.187 billion Operating Profit, an increase of 259%. Margins standing at 8.6%. Packaged Meat $1.174 billion achieved as Operating Profit up 9.5%. Margins standing at 14.1%. Pork $170 million Operating Profit Margin was 2%. Turning things greatly around North America, we had Continuous Cost Saving and Efficiency Measures to optimize our business structure. Our Earnings rebounded strongly to record high for Packaged Meat. We continue to effectively manage Pricing, optimize Product Mix and Control Operating Costs. Sustained steady Profits Growth for our Pork Business. We achieved a turnaround due to Improved Market Dynamics, Hog Production Reformation and Improvement in Operating Efficiency in relation to Hog Production Reformation.
We further reduced Volume, lowered Costs and enhanced Performance. Concerning our next step, we are going to vigorously develop core business packaged meats, improve Fresh Meat Business and maintain appropriate levels of Hog Production. Our Annual Hog Production Level has come down from the peak at 17.6 million heads in 2019 to 14.7 million heads in 2024. It will continuously drop to ultimately less than 10 million heads. After such Adjustments and Reform, we will reduce Capital Investment in Hog Production. We will reduce Exposure to Commodity Volatility, improve Hog Production Performance and focus on growing Value Added Packaged Meat Business. Our Europe Business, we realized EUR 274 million in Operating Profit and Margin at 7.3%, among which P ackaged Meat EUR 136 million Operating Profit and Margin was 6.9%. Pork Business EUR 131 million, up 45%, Margin at 7.9%. European Business leveraged its Vertically Integrated Business Model.
We continue to Improve Mix, Adjust Price and Control Costs. With both Revenue and Profits hitting Record Highs for Packaged Meat, we Effectively Managed Prices, optimized Product Mix, Profitability Increased Substantially. For Pork, Profits increased significantly as the segment benefited from Lower Feed Cost, Strong Hog Production, KPIs and Improved Market Spread. We have pursued M and A Channels to stay close to any news about any opportunities. We have completed in March the acquisition of this Spanish Packaged Meat Producer our goal and further expanded our High End Packaged Meat Business. Looking forward, we'll continue to consolidate our Global Resources, leverage Synergies, adhere to the Business Philosophy of Improved Mix, Adjust Price and Control Cost and a Strategy of Industrialization, Diversification, Internationalization and Digitalization to enhance our Leading Position in the Global Meat Industry. We'll focus on the next Phase of Work.
Continue to Improve Operation of Pork Business, Grow the Volume and Strengthen Market Competitiveness. Ensure continuous growth of our results. We will adhere to the Two Adjustments in One Control Strategy for P ackaged Meat Business. Expand Market Network, Adapt to Market Changes, Strengthen Competitive Edges, Drive Steady Environment, Drive Steady Improvement in Sales, Volume and Results. We will optimize our Business Portfolio, steadily push forward Diversification, Strengthen our Global Business Footprint, Mitigate Risk, Improve Quality and Enhance Efficiency. Promote Sustainable Development and Value Creation. With a joint effort of the entire Management Team, we will strive to continue the Positive Business Momentum in 2025 and lay a solid foundation for the steady development of the group in the future. That's the end of my report. Thank you.
Thank you, Mr. Guo. We will proceed to Q and A. If you would like to ask questions, please raise your hand.
Before you ask your questions, please tell us who you are and who you represent.
[Foreign language]
The first question relates to the China Business. In 2024, the Packaged Meat Business achieved a Record Profit Per Metric Ton. Given the challenges in the market, as Mr. Guo mentioned, how are we going to continue to achieve very High Profitability Per Metric Ton in 2025? Are we going to benefit from Lower Cost Inventories that will be carried over to 2025? The second question relates to the Package Meats Volume. Given the demand situation, we are seeing declines in the Packaged Meats Volumes. When are we expecting turnaround of the volumes?
[Foreign language]
The first question relates to the Profit Per Ton in Packaged Meats in 2024. We did benefit from Low Raw Material Costs.
Despite the relatively weak demand, we achieved RMB 4,700 per ton of profit in Packaged Meats, which is higher than our target of RMB 4,000 in 2025. We expect the Raw Material Cost will continue to be low. We are also meeting the challenges of weak demand. On the other hand, we're also proactively adjusting our Product Mix. We will be launching more Value for Money Products which carry Lower Average Profit P er Metric Ton. We believe these Value for Money Products will help us to capture some of the market share in the market, in some of the market we lost in the last few years. Overall, we believe in 2025 the Packaged Meat Profit Per Ton will be lower than 2024 but will still be relatively, probably will only be lower than 2024 if we look at it from a Historical Standpoint.
[Foreign language]
For the Volume Increase in 2025 we will be taking Eight Measures because we are facing a relatively Challenging Market Environment. We will have a lot of measures to try to achieve growth in the Packaged Meats Volumes.
[Foreign language]
First is to Reform Our Sales Team. In the past, all the Sales Efforts are led by the same team but in the future we'll have more Specialized Sales force. In our Packaged Meat Segment we will have Four Different Dedicated Teams, each dedicated to High Temperature Products, Low Temperature Products, Frozen Products, and Snack Products. We will also hire Professional Sales People with relevant experience to lead these Sales Efforts.
Uncertain. [Foreign language]
Secondly is to have a Matrix Sales Force. In the past our Sales is organized by different Geographies which will inevitably lead to some Blind Spots in the sales coverage.
In the future we'll add more Dimensions to the Sales Network to include Dedicated Sales for the products in addition to the Geographies. We believe that would help us to enhance our Penetration Design.
[Foreign language]
Number Three relates to the Doubling Network Strategy. We have been launching this Doubling Network Strategy and based on our stats for the customers who have adopted our Version 1.0, their Sales Growth is 1.8 percentage points higher than those who did not. For those who have adopted Version 2.0, their Sales Growth is 3.7 percentage points higher than those who did not. We believe this doubling network is a very Effective Strategy. In 2025 we'll continue to promote the strategy and target to increase Point of Sale by 200,000.
[Foreign language]
Four strategies to enhance our Market Research Activities to better understand the Changes in the Market Dynamics to better serve the customer needs.
[Foreign language]
Number Five is to enhance the Granularity of the Sales Network Management. Specifically, we're going to increase the number of Salespeople in our Packaged Meat Business by 50% so that we have more resources who can manage the Frontline Point of Sale because in the past a lot of this Retail Point of Sale are managed by the staff of our Distributors, but we are increasing the management by our own Salespeople.
[Foreign language]
The Sixth is to grow our Marketing Investment into the market to support our Distributors. This also relates to the comments earlier about potentially Lower Packaged Meat Profit Per Metric Tons because we will return some of the profits to Marketing to support the Marketing and Advertising.
[Foreign language]
Number Seven is to increase the adoption of Digitalizations to use Technologies to empower Marketing. Number Eight is to enhance the Incentives to the Sales Professionals. Also, we're not only increasing the Incentive, but also we'll be more precise when we incentivize the staff based on their Performance.
[Foreign language]
For these Eight Initiatives, some of them have already started in 2H 2024. We believe the effects of these Strategies will be reflected in 2025 to help us achieve Positive Growth in Packaged Meats Vol.
Volumes.
We are also expecting Strong Growth, meaningful growth from our Poultry Products as well as the Fresh Pork Business. Overall, the volume should achieve a stable growth.
[Foreign language]
The second question relates to WH, so after the Smithfield IPO, will there be any changes in the strategies? Will the IPO allow the company to have different strategies to have the ability to explore more opportunities? Number three relates to the U.S. Business. Given the demand in the U.S. Market, will that have pressures on our performance?
Ling.[Foreign language]
Sure.
So.
In terms of our Strategies in the future, I think the philosophy is the same that we focus on what we're strong at and will continue to expand and strengthen where we are good at. In China, we have this strategy of Industrialization, Diversification, Internationalization and Digitalization. These are Strategies we believe can help us enhance our Competitiveness in the market. Secondly, our strategy will be to expand the Fresh Pork Business and continue to strengthen our Packaged Meat Business. For the Hog Production, we'll continue to rationalize its capacity to have a Proper Level of Vertical Integration to support the Downstream Business. We believe appropriate Vertical I ntegration is around one third, but you know, it may vary depending on the regions.
It may be higher in Europe, but should be lower in China and U.S., so we will see some areas of growth and also in some areas of Reductions. We will also continue to promote Innovations in Management and in Technologies and Leverage the Resources we have in China, U.S., and Europe to achieve Synergies. We may also consider Diversification into other Proteins such as Poultry and Beef if there are Appropriate Opportunities. In terms of Digitalization, we will try to use advanced Technologies such as Artificial Intelligence to help improve our Traditional Business. This is our strategy.
Shane, do you want to take the third question related to the U.S. Business?
Shane or Mark,
yes, we'll answer the question. I think the question was really about how is Pork positioned in 2025? Have you started approaching—I’m really bullish on the outlook for 2025 for a number of reasons. First, I would tell you that the beef market continues to be elevated and the Recovery Period for Beef has really been moved out from what was thought to be an End of 2025 Recovery to really now look into 2027. The Expectation is that Beef will remain elevated in the Medium Term. When you think about the context of Chicken, another Protein, Year Over Year, Chicken Breast is up about 50%. When you look at that on a Wholesale Price Perspective, Chicken Breast is up about $2 or up to about $2.30 a pound. You compare that to a Pork Loin, which is about $0.65.
The Value Proposition for the Pork is really in a Fantastic Position right now, especially as U.S. Consumers move into some more Pricing Pressure and their Ability to Spend. I also think when you think about Pork as a Protein, it's really a very Versatile Protein and you can do a lot with Pork and the wide variety of uses both across use occasions, meaning the different day parts of breakfast, lunch and dinner, and also as to the versatility from it can either be centered or plate or for an ingredient. I'm really bullish on the outlook of pork as we think about it into 2025 or through 2025. I think the Dynamics are setting up well for pork to be really supported as a protein across the industry.
Xiaomin, I'll let you translate and I think Mark may add to that a little bit.
Yeah [Foreign language]
I would just add that again everything Shane said and the fact that our outlook for 2025 really reflects our best view of the business as we see it today, and we provide that range of estimates to account for variables such as a Dynamic and Fluid Consumer and Geopolitical Environment. That is all factored into our guidance for the year.
Your. [Foreign language]
Xiaolu. [Foreign language]
Three questions from Tiffany of Citi. The first relates to the outlook for the Fourth Quarter both for China and U.S. She is asking for comments on the China First Quarter Outlook given all the measures taken as explained by Mr. Ma and also the Outlook for First Quarter in the U.S. given the bullish view as expressed by the U.S. Management Team and also on the U.S. Pork Business, I think primarily related to Hog Production last year, there is a very substantial improvement in profit compared to 2023. How much of that is driven by commodity favorability and how much of that is driven by improvement in the management? Thirdly, it relates to the Dividend Policy. This Year's Payout Ratio for the Annual Dividend is 50%. Will the company consider Higher Payout in the future?
[Foreign language]
For China Outlook for the First Quarter, because of the Compliance and Regulatory Restrictions, we're not able to provide very specific colors. Three Comments to make. First, and that's the First Comment. Secondly, the Effect of the Eight Measures as outlined earlier will be gradually impacting our Performance. Thirdly, based on everything we have seen so far, the Fresh Pork Outlook is good and the Packaged Meats Outlook is not so optimistic.
Shane and Mark, do you want to give a quick response to the First Quarter Outlook?
Yeah.
In summary, you know, our Outlook for 2025 again reflects continued Operating Profit Growth with a range of outcomes that really reflect the Dynamic Consumer spending and tariff environment. Specifically, with regards to the First Quarter, I want to point out some market related trends. There has been strength in Hog Prices as well as Meat Prices in the First Quarter. Since we play across all the Verticals, it really benefits Smithfield as a whole. With respect to each segment, though, in our Packaged Meat Segment, Raw Material Prices are up and Easter is later this year than last year. That is going to dampen Q1 Profitability Versus the Prior Year. For Fresh Pork, last year Q1, we saw an unusually strong spread between the cutout and Hog Prices.
The spread this year reflects a more normalized level while in Hog Production we're seeing Higher Hog Prices and Lower Grain Prices this year versus last. You know, I think those are kind of the Highlights. As a reminder, with the new External Hog Production ventures that we commenced in the First Quarter, we'll see Higher External Grain Sales in Hog Production this year. These sales are at a more Neutral Margin. You know, in summary, these are kind of the key trends to think about when comparing the First Quarter of 2025 versus 2024.
[Foreign language]
To the second question, Xiaoming and U.S. Hog Production, you know, the changes we have experienced in that business between 2023 and 2024 have really been a combination of both Market Factors and some of our own Internal Reformation Changes. You know, as a part of this Reformation, to move our Production levels down to the 11.5 million we expect in 2025, we did remove a number of Underperforming or High-Cost Farms and also some Geographically D isplaced Farms. You can think about Farms in places like Utah that were just too far from the grain belt and too far from the plants. That has been a big focus of ours in bringing down our overall Cost Structures. On the Market side we have seen a big recovery in the price of Corn.
Beginning in the Fourth Quarter of 2022 we began to experience those really High C orn and Soybean Meal Prices and through 2023 and really working our way out of that by the time we got to the end of the First Quarter of 2024. That has had a big impact on our comparability when we think about 2024 to 2023 and looking at the future strip going forward in 2025, we do see if you look at Corn and Soybean Meal Prices compared to Hog Prices, we do see an Industry Return to Profitability in 2025. When we think about the improvement it's been Market Based, it's been Reformation Based and it's also been some of the things we've been doing from a Genetic Standpoint, from a Feed Efficiency Standpoint and from an Overall Health and Livability Standpoint.
It's been a combination of a number of things that we've really been able to see this quick rebound from 2023 and we expect to see that continue as we move through 2024, 2025.
[Foreign language]
I would just add to finish it up in Hog Production. We're not done yet. We still think there's plenty of opportunity in front of us. We've changed our Management Team in Hog Production and we still see areas where we can improve as we benchmark our KPIs both internally and externally. As we think about the improvement we saw between 2023 and 2024, we're still working every day to continue to improve those underlying cost .
[Foreign language]
Xiaoming, with regards to the Dividend Policy, the Policy is 50% of Net Income and we expect.
Mark, I think. Mark, I think the question is for the WH Dividend Policy.
Ah, got it. Okay, thank you.
[Foreign language]
The China Team and the Smithfield Team has discussed the First Quarter outlook and for WH Group and we believe the First Quarter the overall performance will be stable and potentially achieve growth. For Dividend Policy, because we have in the last few years we have seen improvements in our Profit in our Underlying Business and also we have very Strong Cash Flows in 2024. The Cash Flow, the Free Cash Flow is $900 million higher than the prior year. We also have relatively low leverage with Low Cost of Debt Financing. In the future we will look at a Dividend Payout of around 50%.
[Foreign language]
The question relates to the U.S. Business from China Renaissance.
Eight years ago when Trump, during Trump's First Administration, there were some Trade Frictions between the U.S. and neighboring nations which resulted in an oversupply of Pork in the U.S. Domestic Market which depressed the Pork Prices. What is the company's assessment of this time and how will that impact the company,
me and Management , then why gonna. Uncertain. [Foreign language]
Tang. So.
In terms of the Tariffs, currently the Pork Import from the U.S. is already subject to very High Tariffs, in aggregate around 47%. We believe the overall impact is Manageable and not significant. First of all, the U.S. Business is focused on its Domestic Market and has a lot of Resources and Advantages in the Domestic Market. Secondly, we have very Strong Packaged Meats Business in the U.S. which can absorb a lot of Import, a lot of Products from the Fresh Pork Business. Thirdly, the export to China is primarily Offal, Bones which have Low Values in the Domestic Market. The Price Gap between China and the U.S. is very significant. We continue to expand the Production and the actual Export of these kind of products. Fourthly, the demand for Pork is very robust, is resilient.
As Shane mentioned earlier, the prices for alternative Proteins in the U.S. is very high at the moment. Fifthly, we have a lot of resources and capabilities to manage these risks. The situation in 2018-2019 is also different this time because last time China has Very High Prevalence of ASF, which resulted in Extremely High Pork Prices which is almost twice as nowadays level. Also, nowadays the import from U.S. is less than 5% of the total China Pork Consumption. The tariffs would not have impact to our market.
[Foreign language]
Questions from the UBS Analyst. The first one relates to China Business. Can Mr. Ma also comment on the Outlook for Fresh Pork and the end of the Upstream Hog Production Business?
Secondly, related to U.S. Packaged Meat Business, in the past few years, the Packaged Meat Business has steadily improving Profit Per Metric Ton, which is already at a high level. What are the opportunities to further improve the Profit in Packaged Meat Business?
Boujuda yoshi diao boy. [Foreign language]
On Fresh Pork Business, we expect the Volume will increase significantly this year both in terms of the Harvesting Volume and the Fresh Pork Sales Volume. First of all, we have taken a lot of measures to expand our Customer Base. In the fourth quarter last year, we have increased several thousand customers. Some of them were old customers, were previously our customers, and some were new customers. Also, from a Market Standpoint, last year we faced a lot of competition from some of the Upstream Business which were very aggressive in the Fresh Pork Business.
This year because of the Low Hog Prices, we think the competition from the Hog Raising Companies will moderate and we will also benefit from Lower Hog Prices. In terms of the measures we're taking, there are Five Areas. First is to expand and upgrade our Customer Base. We expect to increase the customer by 10,000. Secondly, we use our Brand Influence to promote the Sales in the local market of our Plants. Thirdly is to Expand the Sales of Higher Valued Processed and Deboned Products, which is also a unique Advantage of Shuanghui. Fourthly, we utilize our Nationwide Footprints to dynamically deploy our Resources and our Products to achieve the best value from the Hog. Fifthly is to continue to Improve and Upgrade the Product Mix to sell more higher valued case ready and marinated products.
[Foreignlanguage]
For the Poultry Business the past two years the performance has been disappointing, but we have done a lot of work to improve the KPIs. We believe these efforts will bear fruits in 2025 and we expect Double-Digit G rowth in the Volumes and the Profit will also increase by several hundred million RMB.
Shane Smith, do you want to quickly comment on the U.S. side?
Yes, I'll talk to the Package Meat ability to grow. First, I'd say we're really pleased with how our Packaged Meats Business has performed. We have achieved more than $1 billion in Segment Profit for three consecutive years. We're doing that at a 14% Margin Profile, which leads our Competitive Set. If you contrast that back to where we were, say, 10 years ago, we were at about a 6% Margin and about $460 million Segment Profit. A lot of really great work continuing to grow this business year after year. What we're focused on to continue that Growth Trajectory is to continue to focus on our Mix, continuing to Convert Legacy-Type Low Margin Products, so you can think of a Holiday Ham, into more everyday use, much Higher Profit Margin Products.
That is one area we can continue to Grow our Profitability. We are also focused on Cost, continuing to improve our Underlying Cost Structures, improve our processes and improve our efficiencies. I'll let you translate and then I'll make a few more statements.
[Foreign language]
If you look at the U.S. Packaged Meats Categories that we operate in, we operate in 25 Categories. It represents about a $46 billion Opportunity. Euromonitor Forecasts those Categories to grow at about a 3% CAGR through 2029. Across those Categories, we do hold the number two position. Ten of those Categories are over a billion dollars and we hold the number one or number two spot in five of those Categories. Where we see Growth is in those Categories where we are not number one or number two.
Lunch Meat is a great example. We have a number five position with an 8% Market Share and that's where we're seeing really Strong Momentum in Products that we're offering like our Prime Fresh Products, which really is an Innovative Product both for our Customer and our Consumer. We see white Space Growth Opportunities in those Categories and we'll continue to execute our strategy of increasing Brand Presence, increasing Distribution Points to continue to move and penetrate and move into those number one or number two position across those Categories that we don't currently hold those positions.
[Foreign language]
Two questions from Analysts from Goldman Sachs. The first one relates to the China Packaged Meat Business. We are benefiting from relatively Lower Raw Material Costs recently. If we look at the long term, if the Raw Material Prices recovers, how will we react? Are we going to continue to stick to the strategies of investing more resources in the marketing and how are we going to balance Market Share versus Profit? The second question relates to our Overall Business Footprints. WH Group has business in China, U.S. and Europe and the plan is to continue to leverage the Synergies between these different Markets. Given the uncertainties in Geopolitics, how will that impact the company's Synergies going forward?
Shuanghui. [Foreign language]
In terms of the first question, Shuanghui has a Long Term and a proven Track Record of absorbing Fluctuations in the Raw Material Prices.
In fact, in the past, whenever there are inflations the current year Profit may be impacted but they will catch up. Their Performance will catch up in the future and it's an opportunity for Shuanghui to adjust the price. If you do a Correlation Analysis, the correlation between Raw Material Prices and Shuanghui Profitability, Packaged Meat Profitability is not very high because Shuanghui has a lot of experience and know how to managing the Costs in terms of the Balance between Market Share and Profit. Our Philosophy is that the priority is Volume but we will also Balance Profit. We are the leader in terms of Profit Per Ton in the Industry. In the past we are focused on RMB 4,000 Per Ton but last year, because of the very Low Raw Material Costs we achieved RMB 4,700 which in our opinion is a bit too high.
We think in the future we will try to maintain a sustainable and healthy level of profit.
Bianhua Godwin and Chinho Jigga. [Foreign language]
We are noticing changes in the market in terms of the consumption Consumer Behavior as well as the Channels. The Channels is becoming more fragmented. It is more fragmented compared to the past where it's predominantly the supermarkets, the wholesalers. Nowadays we're seeing many different formats of Distributions including the Snack Specialty Distributors. In E-commerce there are different formats even within E-commerce. In terms of Consumer Behaviors we are seeing a K Shape Consumption Change. There are strong demand from high end consumptions and there are also strong demand for value for Money Products. The Eight Measures we explained earlier is really to address these Changes in the Market Channels and in the Consumer Behaviors.
We will have a very well-rounded Product Portfolio including High-End Products, Mass Market Products as well as more Economical Products to addressing different Consumption Preferences. We are also expanding our Sales Team to hire more Professional Marketing Experts, efforts to addressing specific consumption scenarios, specific demand from specific demographics.
[Foreign language]
To address your second question, first of all, a lot of our Business is focusing on their Local and Domestic Market. Secondly, Pork is a Staple Product and has a lot of very Resilient Demand from the customers. In terms of Synergies, it is not only the Trade but also there are Synergies in Know-How, in Brands, in Technologies, in the Processes. All these sharing's and exchange of ideas are not impacted by the Tariffs.
Thirdly, we are a Global Leader in Pork, not only in Scale but also in our Business Footprints. We will have a Strong Capability to withstand the Negative Impact from the Tariffs.
I have just a quick question regarding the U.S. Business. Given the uncertainty around the Immigration Policy in the U.S., I'm curious what's Management's view regarding the Potential Risk in the Labor Costs for the U.S. Business in the next few years? Thank you.
[Foreign language]
Yeah, thanks for the question. I would tell you that up to this point we've really not had any significant impacts. Our Policy as a company is to hire only individuals who are Authorized to work in the U.S. We use National Screening processes including E- Verify. It's important to keep in mind that we're located in 41 Different Plants across 19 States. Each of those locations does have its own unique Labor Profile. One of the things that we have done is move away from using Temporary Contract Labor and we put additional procedures in place where we do have that Contract Labor. We've really been focused on becoming an Employer of First Choice in each of the communities that we operate in, and that helps us, again, get that top level of talent in each of the locations.
One of the things we've been doing for a few years now to lessen our reliance on Labor, and Chairman touched on this earlier in one of his Points. We've really been focused on making Investments in Automation and Technology and Digitization. By doing that, we've removed over 1,000 different positions across our footprint. I believe we're really well positioned. We see that in our turnover rates, which are back below pre-Covid level. We think we're well positioned. We haven't really seen an impact yet. With our location across so many different states and footprints, I believe that we're, again, really well positioned in the industry. It.
[Foreign language]