Good evening, dear analysts and investors. Thank you for joining the earnings release for the first half of 2025 for WH Group. Attending today's earnings release includes the management of WH Group, Shuanghui Development, Smithfield Foods, and Morliny Foods, including Chairman and Executive Director of WH Group, Mr. Wan Long; Vice Chairman of WH Group, Chairman of Shuanghui Development, Mr. Wan Hongwei; Executive Director of WH Group and the CEO of Shuanghui Development, Mr. Ma Xiangjie; Executive Vice President and CFO of Shuanghui Development, Mr. Liu Songtao; Chief Executive Officer of Smithfield Foods, Shane Smith; and CFO of Smithfield Foods, Mark ; CEO of Morliny Foods, Luis Cerdan; CFO of WH Group, Ms. Joanna Yan; Zhou Xiaoming of WH Group, Vice President. I speak, this is Guo Lijun, CEO and Executive Director of WH Group. We will have two parts in today's call.
Firstly, I will walk you through the company's performance in the first half, and then we'll take your questions. In the first half of 2025, our packaged meats sold was 1.45 million metric tons, declined by 3.3% year-over-year. Total pork sold was 1.96 million metric tons, 7.5% higher year-over-year. Total meat sold externally was 3.77 million metric tons, 3.5% higher year-over-year. Total revenue was $13.387 billion, 8.3% higher year-over-year. All the numbers reported will be before biological asset fair value adjustments. EBITDA for the first half, $1.585 billion, 7.9% higher year-over-year. Operating profit, $1.259 billion, 10.4% higher. Profit before tax, $1.15 billion, 10.5% higher. Profit for the period, $857 million, 7.7% higher. Profit attributable to the company, $725 million, 4.5% higher. Basic earnings per share, $0.0565.
Based on the company's operation, performance, and cash flow in the first half, the board decides to declare an interim dividend of HKD 0.2/ share, which is, in aggregate, HKD 2.566 billion. If we look at our business by segment, packaged meats is our core business, representing 49.6% of our total revenue and 83.2% of our operating profit. Pork business is 42% of our revenue and 20.3% of our operating profits. Other business is 8.4% of revenue and a loss of $43 million. If we look at our business by region, North America is 55.2% of total revenue and 53.6% of operating profit. China business is 30% of the revenue and 34.6% of the operating profit. Europe business is 14.8% of the revenue and 11.8% of the operating profit.
In the first half of 2025, slow and uneven economic growth across different regions is compounded by continuing trade tensions and policy uncertainties. The hog supply in China was stable, and hog prices remained at a low level. Effective demand for consumer goods was insufficient. North America hog production recovered as feed prices continued to fall while hog prices rebounded. Market spreads narrowed slightly. Fresh meat and packaged meat business faced a cost pressure. The European market was impacted by animal diseases and temporary export disruptions. Hog prices initially fell and then recovered, but on average was lower year- over- year. WH Group leveraged its global platform and a vertically integrated business model, promoted efficiency improvement and cost control, and optimized its business structure, leading to steady improvements in operating results. In the first half, the number of harvested hogs in China increased by 0.6% to 366 million heads.
The average hog price was CNY 15.5/ kg, 0.8% lower year- over- year. In the U.S., the total number of hogs harvested was 63.63 million heads, 0.6% lower compared to last year. The average hog price was $1.5 /kg , up 8.7%. In Europe, the average hog price was EUR 1.5 /kg , down 8.3% year- over- year. The hog prices performance in different regions are different. In China and Europe, the price was lower, but in the U.S., it was higher compared to last year. The average pork cutout value in the U.S. was $2.17 /kg in the first half, 2025, up 4.5% year- over- year. Industry market spreads narrowed as hog prices increased more than pork value. In China, the operating profit was $435 million, 2.7% lower year- over- year. Packaged meats operating profit was $411 million, 10.7% lower.
Pork business operating profit was $28 million, flat year- over- year. We plan implemented a range of measures to compete in a challenging market environment. Q2 results improved significantly, supporting stable performance in the first half of 2025. In packaged meats business, accelerated shift towards specialized category management. Salesforce reformation measures started to yield positive results. Packaged meats sales volume stabilized year- over- year in Q2. Profit per ton maintained at high levels as effective cost control continues. In pork business, we stepped up efforts to expand the customer base and optimize the product mix, resulting in substantial, substantial increase in harvesting volume. Intensified market competition continued to weigh on fresh meat margins, while hog production segment delivered a notable improvement in KPIs and significantly narrowed loss year- over- year. In poultry, volume of chicken produced and processed continued to increase.
Operating profits, operating performance improved significantly, driven by continuous enhancement in KPIs. Digitalization was actively deployed across R&D, manufacturing, sales, and hog production, leading to marked improvements in business management capabilities and operational efficiency. In North America, the operating profit in the first half was $675 million, 24% higher year- over- year. In packaged meat business, the operating profit was $569 million, 7.3% lower year- over- year, largely because last year we recorded a significant amount of employee retention tax credits. In pork business, the operating profit increased substantially to $163 million. In North America, we capitalized on favorable market conditions, optimized the business structure, and implemented cost-saving and efficiency-enhancing measures, resulting in a substantial increase in profits and record high earnings. In packaged meats, with a diversified product portfolio and a channel mix, total sales volume remained stable, while sales volume of high-margin products continued to grow.
We continued to improve mix, adjust price, and control costs to absorb the pressure of rising raw material costs and maintain profitability at high levels. Profitability of pork business increased significantly as the hog production business delivered strong improvement by capitalizing on favorable market dynamics and reformation initiatives, while the fresh meat business maintained stable profits by proactively implementing measures to mitigate the impact of unfavorable market conditions and tariffs. We also reduced the scale of hog production, continued to enhance efficiency in the results. In Europe, the operating profits in the first half was $149 million. The packaged meats operating profit is $67 million, 6.3% higher year- over- year. Pork business, the operating profit was $64 million, 9.9% lower. In Europe, we leveraged the vertically integrated business model to ease the impact of animal disease and continue to make acquisitions. Sales volume continued to grow and profits remained stable.
Newly acquired business continued to contribute to continuous growth in sales volume, improved mix, adjust price, and control cost efforts, mitigate the pressure of rising operating expenses, driving steady growth in operating profits. In pork, we leveraged the strengths of the vertically integrated business model. Profits of fresh pork segment improved significantly, although profit of hog production decreased due to lower hog prices. We also further expanded business footprint and enriched the product offerings. In terms of business strategies, WH will continue to consolidate global resources, leverage synergies, adhere to the business philosophy of improved mix, adjust the price and cost, control costs, and a strategy of industrialization, diversification, internalization, and digitalization to enhance our leading position in the global meat industry.
In terms of business priorities, we'll continue to improve business, pork business, optimize cost structure, improve hog production KPI, grow the fresh pork sales volume, and strengthen market competitiveness. We'll adhere to the two adjustments and one control strategy for packaged meats business, expand market network, optimize sales channels, and strengthen competitive advantage to drive steady improvement in sales volume and profits. We'll continue to optimize our business portfolio steadily to achieve diversification, further strengthen our global business footprint, mitigate risks, improve quality, and enhance efficiency. We'll continue to deploy automation and digitalization upgrades in production, sales, and business management to reduce costs and enhance efficiency. We will maintain the momentum of steady growth, build a solid foundation for the long-term sustainable development of the company. That is all the review of first half performance of 2025. Thank you. I'll move on to the Q&A.
Please follow the instructions of the operator.
[Foreign language] Lillian.
[Foreign language]
The question is from Lillian Lou of Morgan Stanley. The first question relates to the company's strategic priorities in the future. As Mr. Guo has explained, there are a couple of strategic initiatives for the company in the future, and currently the company also has a very clear strategic footprint across different regions. What would be the company's strategic focus and priorities in the future? Secondly, the company increased the interim dividend to HKD 0.20 per share, which is an increase compared to last year. Does that suggest the company also plans to increase the full-year dividends? Thirdly, in China, the packaged meats business volume stabilized in the second quarter and stopped the declining trend in the previous quarters. What measures did the company take to achieve this stabilization of the volumes, and what would be the full-year guidance?
Fourthly, what would be the company's outlook of hog price in the second half of 2025? Lastly, a question related to the U.S. Based on the current data in the futures markets, in the third quarter, the hog price and corn prices continue to be favorable to the U.S. hog production. What would be the company's guidance for the third quarter or second half hog production results?
[Foreign language]
The first half operating profit increased by 10.4%, but net income only increased by 7.7%. There are two major factors between operating profit and net profit. In operating profit, first of all, there's other income expenses, which includes some legal accruals, some insurance claims, foreign exchange gain and loss, interest related expense, and also some restructuring-related expenses. Compared to last year, it is a net increase of expense by $10 million. The second factor is the tax. Last year, we recognized a one-off deferred tax asset, but this year, we didn't have this kind of gains in the tax expense. If you look at the net profit attributable to the owners of WH Group, the growth was even lower. That's primarily because of the dilution from the Smithfield IPO early in the year.
[Foreign language]
[Foreign language]
To answer the question on the hog cycle in China, to answer the question in three aspects. First is Shuanghui's methodology of predicting the hog price. Our prediction of hog price is not just based on supply and demand. We also factor in a lot of other elements. Obviously, the inventory as well as consumption are two of the most relevant factors. Secondly, in terms of data, there are three areas that I can share with you. First is about the sow inventory. In May 2024, starting from May 2024, the sow inventory has started to increase. In May 2025, the sow inventory in China was 40.42 million heads, based on the public data, representing a year-over-year increase of 1.2%. With this increased capacity, there should be higher production volume in the second half of 2025, which is compounded by weak sales and weak consumption demand.
This will put pressure on the hog prices. Secondly, the hogs produced in the second half of 2025 are essentially the wean pigs produced in the first half. Based on the number of wean pigs in the first half, it is 7.9% higher than last year, which also suggests an increase of supply in the second half of 2025. Number three, for the hog producers that practice extended farrowing, they will procure the hogs in the last round of farrowing hogs in August and September and are ready for production, ready for supply in the fourth quarter of this year. Because this is towards the end of the year, at the end, they will probably only supply the hogs into the market but will not procure more piglets for further growing. With all this data, we believe that supports increased supply of hogs.
Thirdly, you mentioned government policy or government initiatives to reduce the supply. Indeed, the government has met with some large hog production companies in China recently to urge them to reduce the average weight or control the sow inventories. We believe these initiatives will have some impact, but the impact would be relatively limited because these large hog-producing companies only represent a small percentage of total hog production capacity in China. A lot of mid-scale and small-scale hog producers will continue to feel the capacity reduced by the large hog-producing companies. We believe the overall hog production volume will be stable. Based on the latest data from the futures markets, it also suggests a declining or a relatively lower hog price. Shane, do you want to comment on the U.S. hog price?
Yeah, I'll talk about the U.S. hog cycle. Typically in the U.S., what we see is a first and fourth quarter that is loss-making to break even, and profitability in the second and third quarter. As we look at this year, what we see from a USDA standpoint, they expect full-year pork production to grow by about 0.9%. That's due to higher weights and really an expected increase in harvest levels in the second half of the year. In reality, if you look at the last four weeks compared to the same time period last year, what we're seeing on an industry harvest level is the head harvested is actually down about 3%. We think what that shows us is that we're setting up for continued strong pricing through the back half of the year.
That's one of the confidence points for us on why we updated and improved our guidance in hog production in the back half of the year. The second thing, when we look at pork in comparison at a retail pricing level compared to beef and chicken, if you look at where the three proteins were four years ago, for example, beef is up about 24% as a price point. Chicken's up about 22% while pork is only up 7%. When you look at it in comparison to the proteins, that also is another data point that tells us that pork is in a really good position against other proteins for the short to medium term, into next year. A third data point I would point to is lower freezer inventories. When you look across the U.S. and look at freezer inventory levels, we see lower levels than we would typically see this time of year. It's really driven by some of the key problems such as bellies. You take those three things together, Tiffany, and to your question of what does hog pricing look like out of this year and into next year, I think pork as a protein is set up to perform really well into 2026. I think that that's going to be seen in the prices that we see for hogs. We believe we're really well positioned as we finish out 2025 and go into 2026.
{Foreign language]
Luis, do you want to comment a little bit on the European hog market?
Yeah. In Europe, the pork production supply increased in 2025 versus 2022 to 2024. The peak price are below last year, and we expect the prices still decline seasonally in the third and fourth quarter, but keeping the 3, 4% below last year. The pork exports are increasing versus last year, and this with a flat demand in Europe will be the key driver for the prices in the end of the year and next year. One of the factors that still can change the cycle is the African swine fever and the impact, the disease impact that can have in the cycle in the European markets. Thank you.
[Foreign language]
[Foreign language] Valerie.
[Foreign language]
Two questions from Valerie of Goldman Sachs. The first question on China's packaged meats business. The management commented earlier that the second half volume and profit are both expected to increase. In the first half, we did notice the company achieved a good profit per metric ton. Can the management break down these strong profit performance by price and raw material cost? In the second half, what's the guidance for the profit per metric ton? Secondly, on China's fresh pork business, there is significant growth in volumes, but the profit per ton is under pressure. What are the management's comments on these and guidance on the fresh pork?
[Foreign language]
On the packaged meats business, as commented earlier, the volume is expected to increase in the second half. We also believe the hog price or the raw material cost will decline in the second half. These two factors will contribute, will be positive to the profit per metric ton. On the other hand, there are two other offsetting factors. One is that we will be stepping up our investment in the markets to support our volume growth. Secondly, we will promote more value-for-money products, or products with lower profit per metric ton. These two factors will be negative to profit per metric ton. Overall, we believe the second half packaged meats profit per metric ton will remain at a very high level of CNY 4,800 per metric ton. It is a slight increase vs the first half, and also a slight increase vs the second half of 2024.
The full-year average profit per metric ton will also be a record level of CNY 4,200 per metric ton.
[Foreign language] Mark.
Fresh pork business, in the first half, or particularly second quarter, the profits per head is lower. Actually, the fresh products or the fresh product sales continue to maintain good profit per head. The key drivers of the overall lower profit per head is because last year we had increased the profit from the freezer inventories, given the hog prices was in the uptrend, whereas this year, the hog prices in a downward trend. We actually recorded losses in the freezer inventories. For the second half, there are three main strategic initiatives. First is to continue to expand our customer base, grow our volumes to amortize our costs. Secondly, we leverage our processing capabilities to develop more high-profitable products that are customized, that are, you know, in ready case, and that are, you know, are, or for ready made products.
Thirdly, we'll continue to leverage our synergies with the packaged meats business, and sell more further processed products to compete with differentiation.
[Foreign language]
[Foreign language]
Thank you all for attending today's earnings call, and we have had a very in-depth discussion. Thank you, and have a good evening.