WH Group Ltd. (HK) Stock

Okay. Good evening, friends from the -- welcome to WH Group's conference call for the announcement of our results for the first half of 2026. This is Guo Lijun, Executive Director and Chief Executive of WH Group.

Joining today's results announcement are members of the management team from WH Group and from our subsidiary, Shuanghui Development, Smithfield Foods and Morliny Foods in Europe, namely Mr. Wan Long, Chairman of the Board and Executive Director of WH Group; Mr. Wan Hongwei, Vice Chairman of the Board of WH Group and Chairman of Shuanghui Development; Mr. Ma Xiangjie, Executive Director of WH Group and President of Shuanghui Development; Mr. [ Luzon Tao ], Executive Vice President and Chief Financial Officer of Shuanghui Development; Shane, President and Chief Executive -- Luis, Chief Executive Officer of Morliny Foods; Ms. Kamjin Yan, Chief Financial Officer of the company; and Zhou Xiaoming, Vice President of the company.

Today's announcement is divided into 2 parts. We will first present the company's financial and operating performance for the first half of the year, and we'll then take your questions. For the first half 2026, package mid sold is 1.522 million metric tons. Pork sold 2.079 million metric tons year-over-year growth of 6.1%. Revenue USD 13.827 billion, 3.3% higher than last year. EBITDA, $1.681 billion, 6.1% higher than last year. Operating profit $1.231 billion, 2.2% decline compared to last year. Profit before tax, $1.221 billion, 6.2% higher than last year. Profit for the period, $947 million, 10.5% higher than last year. Profit attributable to the owners of the company, $773 million. 6% higher than last year. Basic earnings per share USD 6. 02.

The Board has also declared an interest dividend per share of HKD 0.2. Total amount would be roughly USD [ 330 ] million. Despite a challenging operating environment, we have achieved robust performance with growth in both revenue and volumes. Looking at the business segments. Package made is still our core business contributing to 51.3% of our revenue and 89.4% of our operating profit.

Pork business is also our major business contributing to 39.1% of our revenue and 14.3% of our operating profit. Other business and contribute to 9.6% of revenue and a loss of $45 million. From a region perspective, North America contributes to more than 50% of our revenue, which is 52.9% in the first half. China business was 30.5% and contributed to 36.8% of the operating profit. European business contributed to 16.6% of revenue and 9.7% of the operating profit.

In the first half, the global economic growth moderated geopolitical conflicts elevated trade tensions continued and policy environment remain uncertain. China saw heart continue to reduce, while productivity improved. Abundant supply caused the hard price to decline sharply year-over-year. U.S. pork supply increased price dropped year-over-year. Feed cost was favorable due to lower grain prices. Hog production remained profitable. However, Fresh Pork faced the challenges from narrowing market spread. In Europe, animal disease export restrictions resulted in pork oversupply inside European Union. Hog price dropped significantly pressuring upstream pork operations.

WH Group leveraged our global platform and the value chain, promoted efficiency improvement cost savings, optimize the business structure, continued with pricing mix and control strategy, achieving the growth in volume, while the operating profit decreased slightly. Packaged meat as the core business saw growth in both volume and profits.

In the first half, the number of slaughter hogs in China increased by 1.7% to 372.46 million hogs. The number of slaughter hogs in the U.S. decreased by 0.5% to 63.08 million hogs. From a pricing perspective, the prices dropped in all the regions. In China, the average hog price was RMB 11.2 per kilogram, down 27.5% year-over-year. U.S. average hog price was USD 1.48, down 1.5% year-over-year. European average hog price was per kilogram, down 20% year-over-year.

In the U.S. in the first half, the average pork carat value was USD 2.13 per kilogram, a decrease of 2.2% year-over-year. The market spread narrowed due to port price decreased more than high price. So the spread has narrowed. In China, the operating profit was $454 million, 4.4% higher than last year. Packaged meats $458 million, 11.4% higher than last year. Pork business is a loss of $7 million and year-over-year decline by $35 million.

In China, we captured market opportunities, achieved growth both in volume and profit mid-and packaged meat products external sales volume reached a record high. In packaged meats, we continue to deepen professional reformation stepped up investment in the market improve the customer service quality, continue the price mix optimization and cost control strategy adapted to changes in the consumption trends, volume increased while unit profit remained at a high level.

In Pork business, it captured market opportunities, expanded customer base, harvest volume achieved a significant growth Fresh pork profit under pressure due to severe competition, hog production faced challenges driven by weak car price. In poultry, it continued to expand its scale poultry production, KPI improved while raising costs reduced. Fresh poultry optimize the product mix, expand the network and enhance the competitiveness, total poultry operations improved significantly.

In terms of digitalization, we continue to deepen digitalization deployed extensively in production, sales, animal production and internal management, empowering the company to achieve high-quality development. In North America, first half operating profit was $658 million, 2.5% lower than last year. Packaged meats, $545 million, 4.2% lower than last year. Pork, $182 million, 11.7% higher than last year. In the North America, we leverage integrated business model focused on cost efficiency. Operating profit was stable, while net income achieved a record high.

In U.S. packaged meat, we leveraged breadth of product portfolio and a channel volume remains stable. We continued the pricing mix optimization and cost control strategy making raw material cost inflation, profitability maintained at high level. in U.S. pork, the hog production benefit from favorable markets and effective hedging strategy. Results improved significantly year-over-year. fresh pork profit dropped due to narrower market spread.

Total U.S. pork profit maintained growth. In Mexico, how price dropped, while volume the volume increased profit achieved growth year-over-year. In Europe, in the first half, operating profit was $119 million, 20.1% lower than last year. Packaged meat, $97 million, 44.8% higher than last year. Pork profit, $1 million year-over-year decline by $63 million. In Europe, amid unfavorable market conditions, we continue to integrate synergistic M&As, maintain volume growth, packaged meat and poultry performance continued to improve. New M&A contribute to volume growth.

Operating profit increased significantly year-over-year due to lower raw material costs and pricing discipline. Hog price dropped sharply due to animal disease as well as export restrictions, Pork business faced the challenges and the performance was under pressure. Broiler price dropped poultry business grew both in scale and profit. In terms of M&As, we further expanded the business footprint and increase the product offerings.

We completed acquisition of Wolf Group, a leading German producer of premium sausages, convenient and ready meals. In terms of business strategies, WH Group will continue to consolidate global resources, leverage synergies adhere to the business philosophy of improved mix, adjust price and control costs and the strategy of industrialization, diversification, globalization and digitalization to enhance our leading position in the global meat industry. In terms of business priorities, we will focus on the following to lay a solid foundation for the long-term sustainable development.

Number one, first, enhance the port business, optimized cost structure, improve had production performance, grow fresh pork and strengthen competitiveness. For packaged meats, further optimize the product portfolio, expand the customer network and maintain steady growth in scale and profit. Number three, continuously optimize the pork value chain steadily promote meat diversification, enhanced global footprint and strengthen overall competitiveness. Number four, promote automation and artificial intelligence across the organization, drive digitalization upgrades to improve quality, cost and efficiency.

So that's all from the business review. And now we'll move on to the Q&A.

[Foreign Language].

[Foreign Language].

[Interpreted] So the question from Min Bao. The first one relates to the impact of the Middle East conflict on the cost structure of the company. Has that impact on the company's cost structure? And what will be the impact in the second half? And the second question relates to the trade tensions between China and U.S., China and Europe? What has been the impact of these 3 tensions on the company's performance in the first half and what are the expected impact on the performance in the second half and what mitigation measures can the company take to address these trade tensions?

[Foreign Language].

[Interpreted] In terms of the first question, since the conflict but broke in end of February and early March, the crude oil prices has increased sharply and has remained at relatively high levels. So that has indeed caused.

[Foreign Language].

[Foreign Language].

So the answer was from Guo Lijun, the CEO of WH Group. And the elevated crude oil prices if continues will impact the company's transportation costs, fuel costs and the packaging material cost. But overall, the impact is not material considering the scale of the company's operations. And the company also will also take a lot of measures to try to mitigate the increased input costs in relation to the fuels.

[Foreign Language].

[Interpreted] In recent years, indeed, because of the trade tensions, there has been tariffs against many products, including pork in China, the tariff against the book import from Europe and U.S. has increased significantly compared to a few years ago. And on the other hand, the hog prices and pork prices in China are very low. It has caused challenges for importing U.S. pork into China. And in light of the elevated China -- the tariff against the U.S. imports imported pork into China. We are taking a few measures number one, because the tariff against U.S. pork is 47%. So we are focusing importing more of products. from U.S. And for these offer products, we also try to improve the quality and so that we can expand its exports. And secondly, we are also exploring more channels for U.S. pork export into other countries such as Mexico, Japan, Korea, And number three, in China, we are also exploring more importing channels to try to obtain high-quality products at competitive pricing, new channels, including Europe as well as in South America.

[Foreign Language].

[Interpreted] So that concludes Gordon's question -- answers.

[Foreign Language].

[Foreign Language].

The question relates to the forecast for the second half. In the second half, we will continue to face challenges due to weak consumer demand, inflation pressures, commodity market volatility competition in the market as well as the uncertainties of the policy environment, as we described with respect to the tariffs. So from the company's perspective, we are focusing on optimizing our product mix focusing our core strengths and leverage the advantage of our vertically integrated business model and try to deliver stable and good results to create long-term shareholder values.

[Foreign Language].

[Interpreted] And further elaboration on product mix optimization. So by product mix optimization, we try to adapt to the consumer demand and consumption trends. For example, in China's K-shaped economy, we try to develop both high-end and premium products as well as mid- to low-end value-for-money products to better serve our customers and to also achieve higher volume as well as maintain a good profit.

[Foreign Language].

[Interpreted] In terms of payout ratios, our policy -- dividend policy is no less than 50% of net profit attributable to the owners of the company. And for the first half, the Board has declared a dividend of HKD 0.20, which is flat, same as last year.

[Foreign Language].

[Interpreted] First, to review the performance of the global pork business in the first half, the operating profits of port business in China declined year-over-year in Europe also declined year-over-year. But in U.S., actually increased compared to last year. in the first half across the world, the hog prices has decreased. The pork prices also decreased. In China, the hog prices on average has decreased by 28% compared to last year. In European Union, price decreased by 20% compared to last year. The substantial drop in the European hog price is really driven by weak consumer demand as well as the export restrictions as well as a result of the outbreak of animal diseases. Do you call it industries.

[Foreign Language].

[Interpreted] And the performance of China pork business as well as the China market competitive dynamics. In terms of market competitive dynamics, there has been changes in the dynamics in China in the last few years. In the past, the fresh pork industry are primarily dominated by some smaller fragmented slaughtering houses. But in the last few years, because a lot of the large-scale hog production companies are entering into the slaughtering business, these large industrialized players are more aggressive in expanding market shares. So the market becomes more competitive.

In the past, we're primarily competing against the small players, but now we have many more large-scale competitors. So that has resulted in industry level compression of gross margins. And for our China business, it has also been impacted -- negatively impacted by the reduced volume and profit from import imported meat as a result of the trade tensions.

[Foreign Language].

[Interpreted] And in the future, we expect this trend will continue and the industry consolidation will continue. In the past, there are a lot of large there are a lot of smaller companies. But in the future, there will be fewer but larger companies. So in light of this evolution, we will focusing on expanding our scale while maintaining stable profits. We'll also try to expand our market shares to participate in the market competition.

[Foreign Language].

[Interpreted] And for market share expansion for pork business, it is our major business. We'll continue to optimize the port business and also to expand its market share across the globe. For packaged meat business is our core business, and we will optimize the product mix, optimize the pricing of our products and also to control cost to achieve expansion of market shares.

[Foreign Language].

[Interpreted] And in China, in terms of product pricing in China, we do not expect any material changes in pricing, particularly in the second half as the hog prices and other raw material costs are not expected to have a significant movement. In U.S. and Europe, we obviously will adjust our pricing according to competition, according to raw material costs, but we also will maintain our pricing discipline to try to reduce the volatility in our prices and try to capture more profits. .

[Foreign Language].

[Interpreted] And we will also adapting to the market demand to optimize our product mix. to by -- through product mix improvement to gradually enhance our pricing.

[Foreign Language].

[Interpreted] And as there's no additional questions, we can conclude today's media presentation. Thank you all.Okay. Good evening, friends from the -- welcome to WH Group's conference call for the announcement of our results for the first half of 2026. This is Guo Lijun, Executive Director and Chief Executive of WH Group.

Joining today's results announcement are members of the management team from WH Group and from our subsidiary, Shuanghui Development, Smithfield Foods and Morliny Foods in Europe, namely Mr. Wan Long, Chairman of the Board and Executive Director of WH Group; Mr. Wan Hongwei, Vice Chairman of the Board of WH Group and Chairman of Shuanghui Development; Mr. Ma Xiangjie, Executive Director of WH Group and President of Shuanghui Development; Mr. [ Luzon Tao ], Executive Vice President and Chief Financial Officer of Shuanghui Development; Shane, President and Chief Executive -- Luis, Chief Executive Officer of Morliny Foods; Ms. Kamjin Yan, Chief Financial Officer of the company; and Zhou Xiaoming, Vice President of the company.

Today's announcement is divided into 2 parts. We will first present the company's financial and operating performance for the first half of the year, and we'll then take your questions. For the first half 2026, package mid sold is 1.522 million metric tons. Pork sold 2.079 million metric tons year-over-year growth of 6.1%. Revenue USD 13.827 billion, 3.3% higher than last year. EBITDA, $1.681 billion, 6.1% higher than last year. Operating profit $1.231 billion, 2.2% decline compared to last year. Profit before tax, $1.221 billion, 6.2% higher than last year. Profit for the period, $947 million, 10.5% higher than last year. Profit attributable to the owners of the company, $773 million. 6% higher than last year. Basic earnings per share USD 6. 02.

The Board has also declared an interest dividend per share of HKD 0.2. Total amount would be roughly USD [ 330 ] million. Despite a challenging operating environment, we have achieved robust performance with growth in both revenue and volumes. Looking at the business segments. Package made is still our core business contributing to 51.3% of our revenue and 89.4% of our operating profit.

Pork business is also our major business contributing to 39.1% of our revenue and 14.3% of our operating profit. Other business and contribute to 9.6% of revenue and a loss of $45 million. From a region perspective, North America contributes to more than 50% of our revenue, which is 52.9% in the first half. China business was 30.5% and contributed to 36.8% of the operating profit. European business contributed to 16.6% of revenue and 9.7% of the operating profit.

In the first half, the global economic growth moderated geopolitical conflicts elevated trade tensions continued and policy environment remain uncertain. China saw heart continue to reduce, while productivity improved. Abundant supply caused the hard price to decline sharply year-over-year. U.S. pork supply increased price dropped year-over-year. Feed cost was favorable due to lower grain prices. Hog production remained profitable. However, Fresh Pork faced the challenges from narrowing market spread. In Europe, animal disease export restrictions resulted in pork oversupply inside European Union. Hog price dropped significantly pressuring upstream pork operations.

WH Group leveraged our global platform and the value chain, promoted efficiency improvement cost savings, optimize the business structure, continued with pricing mix and control strategy, achieving the growth in volume, while the operating profit decreased slightly. Packaged meat as the core business saw growth in both volume and profits.

In the first half, the number of slaughter hogs in China increased by 1.7% to 372.46 million hogs. The number of slaughter hogs in the U.S. decreased by 0.5% to 63.08 million hogs. From a pricing perspective, the prices dropped in all the regions. In China, the average hog price was RMB 11.2 per kilogram, down 27.5% year-over-year. U.S. average hog price was USD 1.48, down 1.5% year-over-year. European average hog price was per kilogram, down 20% year-over-year.

In the U.S. in the first half, the average pork carat value was USD 2.13 per kilogram, a decrease of 2.2% year-over-year. The market spread narrowed due to port price decreased more than high price. So the spread has narrowed. In China, the operating profit was $454 million, 4.4% higher than last year. Packaged meats $458 million, 11.4% higher than last year. Pork business is a loss of $7 million and year-over-year decline by $35 million.

In China, we captured market opportunities, achieved growth both in volume and profit mid-and packaged meat products external sales volume reached a record high. In packaged meats, we continue to deepen professional reformation stepped up investment in the market improve the customer service quality, continue the price mix optimization and cost control strategy adapted to changes in the consumption trends, volume increased while unit profit remained at a high level.

In Pork business, it captured market opportunities, expanded customer base, harvest volume achieved a significant growth Fresh pork profit under pressure due to severe competition, hog production faced challenges driven by weak car price. In poultry, it continued to expand its scale poultry production, KPI improved while raising costs reduced. Fresh poultry optimize the product mix, expand the network and enhance the competitiveness, total poultry operations improved significantly.

In terms of digitalization, we continue to deepen digitalization deployed extensively in production, sales, animal production and internal management, empowering the company to achieve high-quality development. In North America, first half operating profit was $658 million, 2.5% lower than last year. Packaged meats, $545 million, 4.2% lower than last year. Pork, $182 million, 11.7% higher than last year. In the North America, we leverage integrated business model focused on cost efficiency. Operating profit was stable, while net income achieved a record high.

In U.S. packaged meat, we leveraged breadth of product portfolio and a channel volume remains stable. We continued the pricing mix optimization and cost control strategy making raw material cost inflation, profitability maintained at high level. in U.S. pork, the hog production benefit from favorable markets and effective hedging strategy. Results improved significantly year-over-year. fresh pork profit dropped due to narrower market spread.

Total U.S. pork profit maintained growth. In Mexico, how price dropped, while volume the volume increased profit achieved growth year-over-year. In Europe, in the first half, operating profit was $119 million, 20.1% lower than last year. Packaged meat, $97 million, 44.8% higher than last year. Pork profit, $1 million year-over-year decline by $63 million. In Europe, amid unfavorable market conditions, we continue to integrate synergistic M&As, maintain volume growth, packaged meat and poultry performance continued to improve. New M&A contribute to volume growth.

Operating profit increased significantly year-over-year due to lower raw material costs and pricing discipline. Hog price dropped sharply due to animal disease as well as export restrictions, Pork business faced the challenges and the performance was under pressure. Broiler price dropped poultry business grew both in scale and profit. In terms of M&As, we further expanded the business footprint and increase the product offerings.

We completed acquisition of Wolf Group, a leading German producer of premium sausages, convenient and ready meals. In terms of business strategies, WH Group will continue to consolidate global resources, leverage synergies adhere to the business philosophy of improved mix, adjust price and control costs and the strategy of industrialization, diversification, globalization and digitalization to enhance our leading position in the global meat industry. In terms of business priorities, we will focus on the following to lay a solid foundation for the long-term sustainable development.

Number one, first, enhance the port business, optimized cost structure, improve had production performance, grow fresh pork and strengthen competitiveness. For packaged meats, further optimize the product portfolio, expand the customer network and maintain steady growth in scale and profit. Number three, continuously optimize the pork value chain steadily promote meat diversification, enhanced global footprint and strengthen overall competitiveness. Number four, promote automation and artificial intelligence across the organization, drive digitalization upgrades to improve quality, cost and efficiency.

So that's all from the business review. And now we'll move on to the Q&A.

[Foreign Language].

[Interpreted] So 2 questions from Lao Chen from BofA Securities. First one relates to China packaged meat business. The second quarter profit per ton in packaged meat business has dropped significantly compared to last year. And based on his calculation, it's roughly RMB 4,000 per metric tons. But on the other hand, the volume growth was not very high. So what's the reasons behind the sharp drop in profit per ton, but relatively moderate growth in volumes? And what's the outlook of volume and profit per ton in the second half. Second question relates to dividends. Historically, Shanghai has a track record of paying interim dividend. But for this half, Change has not declared interim dividend, what's the reasons? And what are the reasons? And what's the outlook for the full year dividend from Shuanghui. And given the challenges in the operations, is it possible to still achieve a flat dividend payout compared to last year for Shuanghui? And for WH Group, we are pleased to see that tables continue to declare an interim dividend. But what would be the outlook given double cash flows are largely from the -- the dividends of the subsidiaries. And will WH Group be able to maintain the dividend per share in -- for the full year?

[Foreign Language].

[Interpreted] The first question from Mr. Mark, CEO of Shuanghui Development. The second quarter per ton for packaged meats dropped by CNY 500 per tonne. For the first half, the decrease was RMB 150 per tonne. So there are a few reasons behind the drop in profit per ton. Number one is the -- we have taken various initiatives we have adopted various initiatives to reform our mid business, including more professionalized sales force and increase. We also increased the headcount in the professional teams. So -- and number two, we also stepped up investments or expenses in certain key growing channels. So these are really the initiatives we took to support our strategy of expanding our scale at stable profit. So that has caused a temporary short-term decrease in profit per ton.

And as the impact of these investments gradually ease -- in the third quarter, we expect the profit per ton will gradually recover. And for the full year, we -- our outlook is still around RMB 4,500 per metric ton which is just slightly below last year's level. So this consistent with the strategy that we formulated at the beginning of the year, which is to grow our volume at stable profitability.

[Foreign Language].

[Interpreted] And the second question relates to the dividend. So first of all, the company's operations are all normal. In the first half of this year, because the hog price in China was very low, which was a decade low. So we have took advantage of this market opportunity to build some inventories including some frozen meat for the packaged meat raw materials. So we believe these inventories would benefit the company's long-term operations. But on the other hand, these inventories will tie up some of the company's cash flows and working capital. So in light of the cash flows as a result of the inventory buildup, the company has decided, the Board after considering all the factors decided not to pay an interim dividend this time. But because this inventory building is a relatively short-term activity. We believe that in the future, we will continue our strategy of shareholder return through cash dividends and maintain a relatively high dividend payout ratio.

[Foreign Language].

[Interpreted] The question is that with the lower investment expense in the market in the second half, will that impact the company's packaged meats volume growth. And the response is that, number one, because a lot of the investment in the marketing and the sales force is really on the personnel cost -- and as the volume grows, these investments will be amortized. And also last year, fourth quarter, we had a relatively lower base. So we are very confident that we can achieve the volume growth in the second half.

[Foreign Language].

[Interpreted] And a clarification on the question on WH dividends, when talking about whether WH can maintain the dividend per share versus 2025. The 2025 number has it should exclude all the special dividends. Just the base should be just ongoing dividend interim and the final dividend in 2025, it was HKD 0.61.

[Foreign Language].

[Interpreted] And a Response from Joanna, the company's CFO. First, we -- our dividend policy has not changed. The dividend policy is no less than 50% of payout ratio is no less than 50% of the net profit attributable to the owners of the company. And number two, we have a strategy or business philosophy of delivering stable returns to our shareholders. For the interim dividend, after considering the company's balance sheet, cash flows we have decided to pay HKD 0.20 per share interim dividend, which was same as last year.

[Foreign Language].

[Interpreted] The question from Tiffany of Citi. Firstly, a follow-up question relates to dividends. So per Mr. Ma's comments earlier, is will we -- will Shuanghui pay dividends to fill the gap that has -- for the interim dividend in the next few months? Or will use the higher final dividend to fill the gap of the interim dividend. And for WH Group, what is the source of the cash flows for the interim dividend?

And secondly, what's Shuanghui's outlook of hog price in the second half as well as for next year. In the interim report, there is roughly RMB 300 million of inventory write-down because of low had pork prices. Is it possible that this write-down will be reversed in the second half? And number three, what is the latest progress of the investigation of the antibiotic incidents. And if there is a potential penalty -- a monetary penalty, what would be the estimated size?

[Foreign Language].

[Interpreted] The first question, the decision of not paying interim dividend is really driven by the strategy to build some low-cost inventories. And for the final dividend, we will -- the Board will evaluate based on the cash flows at that time. And -- but for Shuanghui, the philosophy or the policy of paying a relatively high payout ratio has not changed.

[Foreign Language].

[Interpreted] And for the hog price outlook for the second half, we expect moderate increase in hog price in China compared to the first half. So it's a modern -- so which means that it will be higher than the first half, but will not be significantly higher.

[Foreign Language].

[Interpreted] For 2026, we also expect the hog price will be moderately higher than 2026. And in 2027, will be moderately higher than 2026. And the trend will be similar to this year. The first half is relatively lower compared to the second half.

[Foreign Language].

[Interpreted] With respect to the inventory write-downs, it is -- we strictly adhere to the accounting standard and policies and whether there would be reversals, it will depend on the performance -- depend on the movement of a price.

[Foreign Language].

[Interpreted] And with respect to the investigation, please follow the future announcement.

[Foreign Language].

[Interpreted] With respect to the cash flow for double dividends. So ultimately, the cash flows are all as you mentioned, are from the dividend from our subsidiaries in China, in the U.S. and in Europe. But from a timing perspective, the cash flows historically and also in the future does not necessarily always match one by one, match exactly from a timing perspective. But as explained earlier, we have -- there's no change in our dividend policy, and there is no change in our dividend philosophy.

[Foreign Language].

[Foreign Language].

[Interpreted] So 2 questions from Veronica of UBS. First relates to China packaged meat business. as Mr. Ma commented earlier, we have stepped up investment in some key growing channels. What are the effects of -- or the returns of this investment any changes in terms of the growth, in terms of market shares or in terms of business mix change? And second relates to the U.S. packaged meats. We noticed a relatively soft volume and profit per tonne in the second quarter. What are the latest consumer trends in the U.S. And are we having -- making some changes in our product mix to adapting to these consumer trends? And what would be the outlook for the second half of U.S. packaged meats.

[Foreign Language].

[Interpreted] On first question response from Mr. Chao, the President of packaged meat in China. We indeed stepped up investment in the market in the first half. In the past, the traditional channel contributes to most of our business. So we also step up investments in the traditional channels. In the last few years, we have seen declines in the volumes in traditional channels. But this year, we have stopped the decline and achieved a small year-over-year growth. The traditional channels include some supermarkets, small grocery stores and also wholesale markets. For the new channels, it is indeed growing much faster, and we invested in these growing emerging channels. In the first half, the growth from the new channels or emerging channels was 43.8%. This is on the back of a few years -- of last year's very strong growth in the new channels already. So with our investment in the market, we have achieved a 9.1% volume growth for the first half.

[Foreign Language].

[Interpreted] Shane, Mark, do you want to take the second question relates to the U.S. packaged meats?

Yes. Mark, maybe I'll start and you add anything I missed. And [ Jan Main ] would you like me to stop along the way to translate or just go all the way to the end of [indiscernible].

Yes, you can finish your response.

Okay. Thanks, Veronica. When I look at the second quarter, one thing I would point out when you're looking at profit per ton or volume, it's important just on the second quarter. It's important to keep in mind that the Easter holiday here in the U.S. was actually in the first quarter of this year. as opposed to being in the second quarter last year. So there's a little bit of a timing shift on some of our higher volume holiday ham business.

But in general, when I think about packaged meats and I look at the quarter, I feel really good about how the business performed. And that's especially considering the environment that we're operating in. Here in the U.S., consumers are still being very cautious and volumes across a lot of the packaged meats portfolio have remained under pressure, and we're all dealing with higher operating costs. But even with that backdrop, we held our volume share. We've continued to improve our mix and we saw operating margins for the quarter at 13.1%. So we're pleased with that.

What we're also pleased with pleased with is that we're seeing some momentum from areas that we've been investing in for really several years now. So when you look at the quarter, our points of distribution were up about 6.2% and -- and we sold multiple brands in our portfolio, gaming shelf space. We're seeing a lot of strong results from some of the innovative products like Prime Fresh or Nathan's Grassfed hogdogs, our Eckrich Smoked Sausage, So the innovation piece of our portfolio is really playing an important role, and that accounts for about 20% of our year-to-date volume coming from products that have been introduced through that innovation pipeline. And some of the investments we've also made in the first half that we saw benefit from but are also setting us up for a really confident second half is some of the strong returns we're seeing from the investments we're making behind our brands.

So our marketing support was up, but e-commerce volume grew by about 21.7%. We saw our Gen Z dollars increase by about 15.2%. So we're continuing to bring a lot of younger consumers into the brand. So as we think about the second half and the confidence we have there, our focus really hasn't changed. We like the balance of the portfolio right now. We're going to continue to build our business innovation through distribution gains, through stronger marketing support and then continuing to move our mix to that mix of higher-margin value-added products. And I think there's still a lot of opportunity ahead of us there.

So all of these things that we've done in the first half of the year are really setting us up nicely with a lot of momentum as we go into the second half of the year. So really confident in our packaged mix business and how they performed in the first half considering the environment and how it's placed us for what we believe is going to be a strong second half in the packaged meats business.

[Foreign Language].

[Interpreted] Two questions from Leon of Morgan Stanley. First relates to China's packaged meat business. So in terms of the channels, what is the contribution of the new channels in the sales volumes. And second half, what's the how confident are the company on the positive growth in the traditional channels in the second half?

And second question relates to U.S. U.S. business in the August 11 earnings release Smithfield has revised down the guidance for all the 3 operating segments. For the upstream business, including hog production and fresh pork, the operating margin guidance are lower than last year. So in addition to the cautious consumers, does this guidance revision also reflects changes in the hog price, feed cost and meat prices in the U.S. So what are the drivers of the decision to revise down the guidance for hog production and fresh pork?

[Foreign Language].

[Interpreted] For China's new channels, since the second half of last year, we have achieved a double-digit -- we have been achieving double-digit growth in volumes. First half growth was 43% from the new channels. And the first half contribution in terms of volume was 24%. In the second half, we're confident that it will maintain very high growth, and we expect the full year contribution will be 25% in terms of volume. And we also expect the new channel growth will continue in the next 2 to 3 years and will exceed 30% in the next 2 to 3 years.

This is Mark. I'll take the guidance question. So our team and the business model have really proven resilient in delivering record first half results. But as you indicated, we are tempering our 2026 outlook. And it really primarily reflects lower hog prices and hog production and packaged meats and fresh pork continue to be challenged by a cautious consumer with lower demand and higher input costs. And I'd say our guidance really reflects the commodity markets as we see them today. So we're incorporating in the current hog future strip our expectations for spreads in fresh pork and continued consumer softness. We're also seeing higher freight, diesel and resin costs, but we believe that the assumptions are appropriately prudent given the external environment.

And from here, I think the largest potential upside drivers would be better than expected fresh pork spreads stronger package meets volume from the distribution gains and innovation that Shane had mentioned, I think we could also see a tightening of hog supplies that improves the market pricing later in the year. So the largest risk for us really remains the commodity prices and consumer demands. But as Shane mentioned, we're seeing a lot of strength in the packaged meats business. Distribution points increased by 6.2% in the second quarter. He mentioned Prime Fresh is up 18% and really getting some traction with the Nathan's grassfed business. And additionally, we continue to grow our e-commerce share that was up by almost 22%. So I think that, coupled with the investments that we're making in marketing and advertising, the second half, certainly for the packaged meats business looks to be very strong.

[Foreign Language].

[Foreign Language].

[Interpreted] Two questions from Valerie of Goldman. First, related to China's packaged meat business. What's the latest observations in the market in July and August in terms of the packaged meat performance. And last year, the third quarter profit per ton was relatively high due to the holidays. So this year, given the higher contribution from new channels, what is the outlook for the profit per ton will last year's high base create some difficulties to achieve growth. And secondly, as mentioned earlier, the company has taken a lot of low-cost inventories to support future packaged meat business. So how -- so what's the scale of these inventories? How many months of operations could this low-cost inventory support? And what would be the contribution to the profit?

[Foreign Language].

[Interpreted] In terms of packaged meat profit per ton in the first quarter, our profit per ton was very high. In the second quarter, it was much lower because of the low season also because of our stepped-up investment in marketing. So the low profit per ton in the second quarter has resulted in a small decline in the first half profit per ton. In the third quarter, as we enter into the peak season and also as we rationalize our marketing investment we believe -- we expect a significant -- meaningful improvement in profit per ton. So as explained earlier, the full year guidance is the profit per ton is generally flat compared to last year or a very small decline compared to last year.

[Foreign Language].

[Interpreted] It is very difficult to quantify the impact of the inventory built up because it's a very dynamic process. We increased our inventories when the hog prices are low. -- and reduced inventories when the hog prices are high. And once the raw materials are putting into the warehouses, they will amortize the overall cost base. It's a very, very dynamic process and infeasible to quantify.

[Foreign Language].

[Interpreted] 2 questions from Weixin of CICC. First, on China business. In the first half, the expense in relation to advertising and promotions increased to 30% year-over-year? And what's the outlook for the second half? And secondly, relates to the U.S. business, as there has been a lot of speculation about the impact of all Nino effect on the global climate, which may result in higher corn prices. And so investors are concerned about the negative impact from higher corn prices. How will that impact our business in the U.S.? And how -- and can we take some measures to hedge against this risk?

[Foreign Language].

[Interpreted] In the first half, particularly in the second quarter, we have indeed significantly increased spending in marketing, and that has impacted our results for the second quarter. In the second half, we plan to significantly rationalize our spending in marketing. But the exact magnitude will depend on the market environment. Shane, Mark, do you want to take the second one?

Yes, I'll take the second one. So we also pay a lot of attention to the owning of weather patterns, but in the context of overall global weather patterns and their impact on corn and soybeans. We do have a very robust hedging program. And so we do take advantage of that where we see opportunities. The good thing about per longer-term liquidity in the futures markets, which kind of allow us to take longer-term positions in corn. While we don't give our hedging positions away, I would just say that, that is a key part of our overall strategy.

But outside of corn, it really comes -- we also have to play in all the just structural improvements that we've made in the business. from the way we buy form so through investments we've made in grain elevators through the country and how we've converted some of our corn usage into bakery byproducts to offset some of the volume requirements we have in corn to maintain that carbohydrate level. So we have a very robust feeding program, and we have a very robust hedging program, and we use both to the benefit of the company.

[Foreign Language].

[Foreign Language].

[Interpreted] If there are no more questions, we conclude today's earnings call. Thank you.

[Interpreted] Good evening, analysts and investors. Welcome to WH Group's 2026 First Quarter Results Conference. This is Guo Lijun, Executive Director and Chief Executive Officer of WH Group.

Joining today's results call are members of the senior management from WH Group and our subsidiaries, Shuanghui Development, Smithfield Foods and Morliny Foods in Europe, including Mr. Wan Long, Chairman of the Board and Executive Director of WH Group; Mr. Wan Hongwei, Vice Chairman of the Board of WH Group and the Chairman of Shuanghui Development; Mr. Ma Xiangjie, Executive Director of WH Group and President of Shuanghui Development; Shane Smith, President and CEO of Smithfield; and Mark, Chief Financial Officer; Luis, CEO of Morliny Foods; Ms. Joanna Yan, Chief Financial Officer of the company; and Zhou Xiaoming, Vice President of the company.

Today's earnings call will be divided into two parts. I will first present the company's first quarter financial and operating performance and then we will take your questions.

Now I will walk you through the first quarter performance of 2026 of WH Group. In the first quarter, packaged meats sold total volume was 781,000 metric tons, 9.4% higher than last year. Pork sold is 1.037 million metric tons, 5.6% higher than last year. Total revenue, USD 6.994 billion, 6.7% higher than last year. EBITDA, $869 million, 10.6% higher than last year. Operating profit, $643 million, 7.5% higher than last year. Profit attributable to owners of the company, $396 million, 8.8% higher than last year. Basic earnings per share is $0.0309, also 8.8% higher than last year.

So based on the performance of the first quarter, our volume revenue and the profit all achieved year-over-year growth.

Now we look at the performance by segments. Packaged meats is still the core business of our group, contributing to 51.7% of total revenue and 90% of our profits. Pork business is 39.1% of our revenue and 13.4% of our profits. Other business is 9.2% of revenue and a loss or expense of $21 million. Breakdown by region. North America is 53.1% of revenue, 54% of operating profit. China business is 31% of revenue and 39% of operating profit. European business is 15.8% of revenue and 7% of the profit.

During the first quarter 2026, China hog market has a total slaughter volume of 200 million heads, 2.8% higher than last year. At the end of first quarter, hog inventory in China was 420 million heads, up 1.5% year-over-year. China average hog price was RMB 12.35 per kilogram, 23% lower than last year over year. So overall, the total supply inventory increased and the price has decreased.

In the U.S., the number of slaughter hogs decreased by 0.8% to 32 million heads, and the average hog price was $1.44 per kilogram, 0.6% higher year-over-year. In Europe, the average hog price was EUR 1.16 per kilogram, down 18% year-over-year. So in the first quarter in China and in Europe, the hog prices has declined year-over-year, whereas in U.S., the hog price maintained stable and with a slight increase compared to last year.

Now we look at the performance by different regions. In China, the operating profit in the first quarter was $251 million, 16.7% higher than last year. Packaged meats delivered $255 million of profit, 25.6% higher than last year. Pork business has a loss of $2 million year-over-year, decline of $18 million. So packaged meats business has growth in both volume revenue and operating profit, and the operating profit has achieved double-digit growth.

In North America, the operating profit was $347 million, 5.2% higher than last year. Package meats, $278 million of operating profit, 4.5% higher than last year. Pork business, $98 million of operating profit, 5.4% higher than last year. So in North America, our business have maintained growth in both revenue as well as profitability.

In Europe, the operating profit declined by 15% to $45 million. Packaged meats business delivered $45 million of operating profit, increased by 40% compared to last year. Whereas for pork, there's a loss of $10 million, $32 million lower than last year. So in China and in Europe, we have growth in both packaged meats. But in the upstream business, because of the market dynamics, we have declined profitability in both China and Europe.

Going forward, WH Group will continue to consolidate its global resources, leverage synergies, adhere to the business philosophy of improve mix, adjust price and control cost and the strategy of industrialization, diversification, globalization, digitalization to enhance our leading position in the global meat industry and lay a solid foundation for long-term sustainable development. In terms of priorities, we'll continue to focus on our core packaged meats business to achieve steady growth in volume and profitability.

In China, we'll respond to evolving consumer markets and promote product and channel transformation to achieve a breakthrough in sales volume. In the U.S., we need to mitigate the pressure of increasing costs, optimize product mix, maintain high profitability. In Europe, we'll continue to expand our business scale through organic growth and acquisitions, reduce costs and improve efficiency to increase profitability.

In the pork business, we will continue to increase the harvest capacity, absorb fixed cost and strengthen competitiveness and profitability. In hog production, we'll achieve a competitive cost structure by improving the biosecurity and KPIs. We will also accelerate the development of poultry business and enhance operational performance to further advance our meat diversification strategy and achieve synergistic development through complementary business. We will also implement management and process innovations as well as automation upgrades for all segments while accelerating the research and application of artificial intelligence, reduce costs, increase efficiency and enhance overall competitiveness.

So that's all for the first quarter performance. Now we'll open the line for questions.

Morgan Stanley, Lillian Lou.

[Foreign Language]

[Interpreted] So two questions from Lillian of Morgan Stanley. First question relates to China business. So in the first quarter, as Mr. Guo has explained, china's packaged meats business has delivered good growth in terms of both volume and profitability. But some of that is probably attributable to the lower base in 2025 first quarter when the packaged meats business volume was under pressure. And in the first quarter '26, packaged meat business also benefited from sharply declined hog price after the Chinese New Year.

So what's the company's outlook for second quarter and the third quarter volumes considering the relatively higher base in 2025? And also how to achieve a sustainable growth in the packaged meat business? And also, what's the company's profit per ton outlook? Can the market continue to expect higher than guidance profit per metric tons in packaged meats?

Second question relates to the U.S. business. So based on the current future price, it looks like the second quarter hog production business -- hog price continue to increase year-over-year. So that could benefit the U.S. hog production. Is it fair to expect good profitability growth in the second quarter upstream business in the U.S.?

[Foreign Language]

[Foreign Language]

[Interpreted] Just to recap the response, first, from Mr. Ma, the President of Shuanghui Development. So in terms of the volume growth and profit growth, indeed, we benefit from a relatively lower base from the first quarter 2025 when the market was ongoing some destocking. But the lower base of 2025 was not the main driver of the year-over-year growth for 2026 first quarter. The growth is primarily driven by various initiatives we have taken in terms of specialized management, in terms of product innovations. And we expect in the second quarter and the third quarter, we will maintain volume growth even though the magnitude of growth may be smaller compared to the first quarter.

And how do we maintain sustainable growth in packaged meats? There are five primary strategies or initiatives. First is the specialized management of our business. We specialize the sales force, the distributors, the channels and the markets so that we can more effectively manage the market. And secondly, we also optimize our product mix by addressing the K-shaped consumption trend, where we see strong demand for high-end consumers and also low end markets. In the high-end market segment, we have developed a lot of Smithfield branded products. And in the low end, we continue to roll out many high value for money products.

And thirdly, we also deploy digitalization tools to help us improve efficiency. Number four, we continue to promote the double network or double POS strategy, where we significantly increased the number of point of sales or distributions. Number five is to be more precise in terms of marketing expense investments. We have significantly increased our spending in marketing, but we also want to make sure that the investment and allocation of these marketing budgets are very, very precise.

In terms of profit per ton, in the past, we have maintained relatively high profit per ton at around RMB 4,000. And last year, it was very high at RMB 4,700. This year, our business strategy for both packaged meats and fresh pork is to grow our volumes while maintaining stable profit. In the first quarter, we have seen declining hog prices. That has helped us achieve relatively high profit per metric ton for packaged meats. And going forward, for the remaining part of the year, we expect the profit per ton may decline compared to last year, but it's going to be stable at a high level because there are two offsetting factors.

One is our stepping up in the marketing spending and, on the other hand, is favorable hog prices.

And some supplementary comments from Chairman of Shuanghui Development, Wan Hongwei, talking about main strategies we have developed this year in terms of our distribution network management, the channels and products.

First, in terms of the management of the distribution channels, we are also learning the experience from other leading consumer and retail companies in China to enhance the granularity of our management of the channels. We are not just relying on the distributors to manage the market. We are -- the company will be playing a more active role in managing the market. We partner with our distributors and leverage data-driven analytical tools to better understand the market. And we work together with our distribution partners to address any issues and the challenges they face in the market.

We have launched a number of pilot programs in South Henan region, which has yielded good results, and we are expanding these pilot programs in other regions such as Northern Henan province, Shandong province and Liaoning province. So these efforts have given us confidence in its continuous success in more -- in higher granularity in the management of the channels.

And secondly is in light of the Chinese government's push for improving domestic demand through cultural activities and tourism, we also have set up a special channel team this year. This is another change we have made in our sales team in addition to the KA team we set up earlier. So we have also set up the mobilized resources across our business segments and various sales regions for this special channel team. And we partner with the high-speed rail stations, highway gas stations, some tourist attractions and amusement parks as well as airlines to work together to sell our products.

And in this year, in the Chinese New Year as well as in the Qingming Festival, there, we have organized many marketing activities. And we believe these activities were beneficial to the sales of some of our grilled sausage products as well as the promotion of our brands. and we believe this will continue to yield good growth for us.

And thirdly, in terms of products, we are also developing many regional products. This is a new strategy for us where we will, based on the different taste and the preference of consumers in different regions, to develop products that tailor to each specific consumer regions such as Northeast, Eastern China and Northern China. And we will keep you updated on the progress of this regionalized product strategy, and we are confident that this will also generate incremental volume growth for us.

Shane, Mark, do you guys want to take the second question relates to the U.S. business?

Yes. So the U.S. hog...

Shane, you need to speak closer to the mic.

Can you hear me?

Yes. Yes, we can hear you now.

Okay. So the question was really about the U.S. hog production and the implications of the U.S. futures price. And I'll begin by saying in the first quarter of 2026, we continue to see positive growth in profitability with profit of $4 million versus $1 million in the prior year. And that's really, again, showing that seasonality in hog production, where typically that first and fourth quarter or a little bit weaker in the second and third quarters.

We are continuing to progress to a best-in-class cost structure. So I think to the crux of the question, in 2026, I would tell you, we're looking for and the future strip would imply a similarly strong year to 2025. And that gives us the confidence, as you saw in our press release this morning, to go out and reconfirm the guidance that we had issued for hog production for 2026 of between $150 million and $200 million.

I think it is important to note that the USDA is estimating about a 1.4% increase in hog production. Typically, that translates into a lower hog price than we would have seen in 2025, but we believe that's still going to be historically healthy levels. So really pleased where we are in hog production, pleased on what the future strip is showing. And while we don't speak specifically to quarter-to-quarter, over the year, again, we've reconfirmed our guidance for hog production.

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Interpreted] So two questions from Luo Chen of BofA Securities. First, on China business. So in China, given we have noticed the very sharper than expected or anticipated decline in the hog prices this year and given this trend, what is the company's updated outlook for the hog price for the full year. And also in the first quarter, most of the business segments performed very well in China except the hog production, where significant loss has been incurred. So what's the company's full year outlook for the hog production in China?

Second question relates to the U.S. business. We understand there is a lot of pressure on the cost side of the business. And in the first quarter, we noticed a slight improvement in profitability for packaged meats. And given the elevated cost, what is the company's outlook for packaged meats profit for the full year? And what initiatives or strategies the company can adopt such as adjust the price, improve efficiencies to mitigate the elevated cost in the U.S.?

[Foreign Language]

[Interpreted] So this is Mr. Ma from Shuanghui, the CEO of Shuanghui Development. In terms of the hog price, we think the trend we predicted earlier or forecasted earlier is largely the same except that in the second quarter, the bottom of the hog price will be lower than we had anticipated. So the average hog price will be lower than we had forecasted at the beginning of the year but not significantly, and the overall trend will not change.

In terms of hog production in China. Because of our hog production team is not very specialized and they do not have sufficient expertise, so even though we have seen some improvements in the KPIs, we continue to -- we had incurred losses in the first quarter as the volume in hog production increased and also the hog price was much lower than anticipated. For the full year, even though we will see some improvements in the KPIs because of very low hog prices, there's opportunity that the loss in hog production will widen compared to last year.

Shane, Mark, do you want to take the second one relates to the U.S. package meats?

Yes. U.S. package meats. And Xiaoming, this could be a little more of a longer answer, so we'll pause in the middle and allow you to translate. So first, in package meats, when we look in the first quarter over last year, volume was up about 3.5%. And so what's important to recognize when you're comparing Q1 of this year versus Q1 of last year is the timing of our Easter holiday.

[Foreign Language]

Still up by 20%.

[Technical Difficulty]

Shane, I think we lost you for like 20 seconds.

Okay. All right. Let me start over. So I was saying, when you compare the first quarter of 2026 versus the first quarter of 2025, you have to take into account the timing of the Easter holiday. So first quarter versus first quarter, our volume was up about 3.5%. But if you adjust for that holiday ham, our volume was still up about 1.3%. So we saw good growth in volumes in the first quarter.

And that's coupled with about a 2.6% increase in our average selling price. And so when we look at volume across our business, there's really some key points. So when you look at units sold, for example, dinner sausage was up about 9%, dry sausage, up about 10%. Our branded volume share across our 25 categories was up in total about 1.6%. Our packaged lunch meat volume, which is 1 of those 25 categories, the largest category, our volume in packaged lunch meat was up about 11%. And that's in a category across the industry that was down about 6.5%.

And inside of that category, that's where we sell our prime fresh. And Prime fresh was actually up about 26%, and we increased our points of distribution in that category by about 18%. And then innovation. So we've really talked a lot about focus on innovation. And when we look at some of the success stories in that, we saw a 12% increase in our Armour dry sausage, some of the new products we've launched there, and a 22% increase in Curly's barbecue meats. So we've seen good gains across volume share, across volume and across profitability across that retail channel.

And then Food Services is another great story. So sales were increased by about 4% in Q1 and volume was up about 1%. And then we launched 12 LTOs during the first quarter of this year.

So I'll let you translate that, Xiaoming, and then I'll move how that ties back to the cost question.

[Foreign Language]

And to your question on cost. And so when we look at the cost volatility we're seeing, it's really being impacted by the Iran war. And it's really through energy-driven volatility, and we're primarily seeing that in the short term. That's moving through fuel and freight. In the medium term, it's impacting us or is going to impact things like our resin-based packaging. And then over the longer term, it will be in grain and other agricultural inputs that we use in the hog production segment. We are seeing higher fuel volatility, which is increasing our transportation cost.

But we're continuing to proactively manage that fuel-driven inflation through things that we began back in 2024 and 2025, things like our network optimization, lane consolidation, we're adding intermodal where we can, and then we're taking some hedge positions where we can. We are focused on being the lowest cost to serve across our product fleet, our dedicated fleet and on our over-the-road capacity and, again, looking at ways to expand intermodal where we can. In 2025 versus 2024, we had taken about 1 million miles off the road through network optimization, and we expect to see that same level of decrease in 2026 versus 2025. And that's helping us mitigate some of that higher fuel cost that we're seeing.

In the medium term, when we think about things like resins and packaging and those type of things, those are things that will be negotiated as we kind of move through the year. So we expect to see some medium-term impacts on that. And then finally, in the agricultural inputs, on the corn side of the business, we have seen an increase of the cost in corn. But we are able to use things like hedging techniques, for example, or other lower feed cost mitigation to help lower those costs as well. So we're managing through the conflicts. We're taking pricing where we need to. But we're also continuing to focus on cost and mix, and that's really helping us maintain and mitigate a lot of the dynamics that we're seeing across the market.

Mark, I don't know if you would add anything there.

Yes, I would just briefly add that from the consumer standpoint, protein remains a core part of their basket, and we're managing our portfolio to offer value across price points. So demand stays robust. Our brand and marketing investments are targeted and really they're ROI-focused. It's about supporting loyalty and mix and really driving our value-added strategy. So pork continues to be a strong value proposition versus many alternatives in the marketplace.

And just back on the cost side. Based on prior geopolitical disruptions, it's really about the duration and the breadth of any supply chain impacts that matters more than the short-term spot move. So we're planning for volatility and we're staying agile. So net-net, the situation adds near-term input and logistics cost uncertainty, but it doesn't change how we run the business, and we had multiple levers to mitigate that. So we're staying focused on execution, and we again have reaffirmed our guidance in total and at the packaged meats segment level as well.

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Interpreted] So two questions from Valerie of Goldman Sachs. First relates to European business. In the first quarter, the packaged meats business has pretty strong results with very good year-over-year growth. But in hog production business, it looks like there's a lot of pressure. So what's the company's outlook for the rest time of the year?

Second question relates to China business. So will there be a risk that the hog price will rebound in the second half? And if that happens, what measures can the company take to address this risk, such as the frozen inventories?

So Luis, do you want to take the first question relates to the European business?

Yes. The hog production during 2025, at the end of 2025 started a shift to a situation of oversupply of hogs. This extends to this first quarter of 2026. This was aggravated by the African swine fever in November in Spain that make more pressure in the internal market with a decrease of price below EUR 1 in the first quarter. After February, the price started to recover until the level that is actually in Europe that is in the level of breakeven. And we are expecting the price seasonally going up in the second quarter and third quarter of 2026.

You can translate this, Xiaoming.

[Foreign Language]

We expect, with the actual situation in the first quarter, some reduction of inventories in some of the European countries, and this will generate a better situation in the last quarter of the year and for 2027. I m"e" antigen-negative that we expect the total outlook for the year to be below 2025 but still a little below 2025, like the actual price is around 10% lower than 2025.

And for the outlook for packaged meats, we see our packaged meats business, we see continually outperforming. We have record first quarter results in packaged meats, and we see a strong volume and growth in our packaged meats profitability during all the year. Our poultry business, too, is performing very good in the first quarter, and we see that our total performance of the company with a strong resource in packaged meat and poultry business will compensate the decrease in our fresh pork and hog production business.

[Foreign Language]

[Foreign Language]

[Interpreted] So first of all, we expect the second half hog price will rebound but the magnitude will not be very significant. And the recovery of the hog price is also within the normal range of fluctuations, will not have a material impact to our cost structure. We have also made some reserves when the hog price was at the bottom, which can help us offset any potential increase in the hog price. So that will not have a material impact overall to our cost.

[Foreign Language]

[Foreign Language]

[Interpreted] So the question is from Anne of Jefferies. On China business, so as mentioned, there's opportunity that the hog price will increase in the second half. And what's the company's outlook for the hog price in 2027? And also, what's the rationale or the main drivers of the current depressed the hog price in China? Is it because of the competition in the upstream, in the supply side or because of the weakness in the demand side?

And the third one, in terms of channels, as I mentioned earlier, there's good growth in specialty channels. What's the current percentage of the specialty channels and what's the expectations going forward? And a similar question applies to the Food Service channels and other channels. What's the outlook for these various new channels or nontraditional channels?

[Foreign Language]

[Interpreted] So in terms of the hog price, we believe the magnitude of the rebound in the hog price in the second half will not be very substantial. And the overall, the hog price will fluctuate at a relatively low level. The rebound in the second half does not suggest that the hog price will continue to increase after 2026 because we believe, in the next few years, the hog price will remain at a low level because in China's hog production industry, it is becoming more industrialized with many large companies versus smaller farms.

And these large companies are able to withstand the cycles and the market fluctuations, as demonstrated in the recent in the recent market where even though the hog price was at very low level, we do not see significant exits from the markets. And in the next few years, we believe overall supply will be larger than the consumption demand. So the hog price will maintain at a low level even though there are -- there will continue to be small fluctuations due to seasonality, but it's not going to have a huge fluctuations.

And in terms of the new channels, in 2025, the new channels in total was 23% of our total sales. And in 2025, the growth was very meaningful. In the first half -- in the first quarter this year, the growth from this new channel is 50%. We believe the full year growth from the new channels will be 30% to 35%. And with that kind of growth, we think the full year contribution from the new channels will be around 27%. And we hope that in 2 to 3 years, the contributions from the new channels will be more than 30%.

[Interpreted] If you want to ask a question, please raise the hand in the -- press the Raise Hand button in the Zoom.

[Foreign Language]

[Interpreted] If no further questions, we can conclude today's earnings call. Thank you for participation.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Dear analysts and investors, good evening. Welcome to our annual results announcement by WH Group. Today, we have with us Mr. Wan Long, Chairman and Executive Director; and he is seated on the stage with us. Next to him, we also have Mr. Guo Lijun, our Executive Director and CEO; our CFO and Vice President, Madam Joanna Yan. I'm Zhou Xiaoming, VP.

We also have online with us our leaders Mr. Wan Hongwei, Vice Chairman of the Group; Mr. Ma Xiangjie, Mr. James Smith and Louis and Mark. We will first listen to the introduction of our performance in 2025, and then we will proceed to Q&A session.

First of all, Mr. Guo, please take us through the financial situation and business review.

Good evening, everyone. I'm going to take you through the financial summary, business review of 2025. Packaged meat sold 3.054 million tonnes, a drop of 1.5%; pork sold 4.089 million tonnes, an increase of 8.6%. Revenue realized USD 28.026 billion, up 8%; EBITDA, $3.377 billion, up 9.7%; operating profit, $2.612 billion, up 8.7%; profit before tax, $2.5 billion, up 13.2%; profit attributable to owners of the company, $1.591 billion, up 8.2%. Basic earnings per share, USD 0.124.

Based on our operating performance and cash flow for the year to better make returns to our shareholders, we have decided that we are going to propose a final dividend of HKD 0.41 together with interim dividend HKD 0.2, for the full year HKD 0.61, total payout, HKD 1 billion, and they will be distributed after the shareholders' meeting.

If you look at our segment performance, packaged meat is still our core, contributing 50.6% of revenue and 82% of our profit. Pork contribution, 40% to revenue and 22% to our profit. Others, 8.8% and 4.1%, respectively. And North America contribution 54.3% to our revenue, 53% to our profit. China business contribution, 30% to our revenue and 35% to our profit. Europe contribution 15.4% and 10.9%, respectively.

Over the year of 2025, we maintained cash -- operating cash flow at $2.526 billion with a declining CapEx at $611 million, down by 13.6%. Shareholder return -- we proposed level for the full year, $0.61, so that will exceed USD 1 billion payout. We have also maintained a conservative leverage level and debt level towards the end of the year, $3.633 billion as our total borrowing and total debt-to-equity ratio, 0.28.

The global economy demonstrated resilience and escalating trade tensions and policy uncertainties with divergent trends across different regions. Chinese hog market was characterized by strong supply and weak demand, leading to lower hog prices. Effective demand for consumer goods was insufficient. Hog prices in North America rebounded and market spreads narrowed. Profit of hog production improved, while the fresh meat and packaged meat business faced cost pressures.

In the European market, hog prices declined due to animal diseases, war and export restrictions. We leveraged our global platform and vertically integrated business model, optimized our business structure, promoted efficiency improvement and cost control, leading to improvement in all key operating metrics and record high profits.

The number of slaughtered hogs in China increased by 2.4% to 720 million heads. By the end of the year, hog inventory in China was 430 million heads, up 0.5% over the end of 2024. So the volume came up with the prices coming down. Number of slaughtered hogs in the U.S. decreased by 0.8% to 127 million heads. Average hog price per kilo, USD 1.57 in the United States and EUR 1.46 per kilo in Europe, down by 8.5%. So hog prices in China and U.S., both -- China and Europe both went down.

If you look at the spread in the market, average par value in the U.S. was USD 2.27 per kilo, an increase of 7.4%. Meat prices went up by 7.4% and industry market spread narrowed as hog prices increased more than pork values.

Operating profit, USD 934 million in China, down by 1%; packaged meat, $191 million, down by 3.6%; pork, $44 million, down by 20%. We implemented various innovative measures, continue to enhance performance of underperforming segments, expanded sales network and optimized product mix amid a challenging market environment. Our total meat sales volume reached a record high, while profit remained stable.

We have innovative marketing strategies and accelerated channel transformation, driving rapid sales growth in emerging channels. Profit per ton remained strong. We adhere to the strategy of stabilizing profit and expanding volume for pork business. We expand customer base and sales channels, resulting in increase in sales volume. We continue to increase volume of chicken produced and processed, adjusted product mix and expanded sales network for poultry business. We accelerated digital transformation to drive upgrades and management across operations, sales, hog production, administration and R&D.

For North America operating profit, USD 1.393 billion, up 17.4%; packaged meat, $1.097 billion, down by 6.6%; pork, $444 million, up 161.2%. We capitalized on favorable market opportunities, leveraged vertically integrated business model, optimized operational management and implemented cost saving and efficiency enhancing measures, resulting in high record earnings.

For packaged meats, total sales volume remained stable, supported by diversified product portfolio and channel mix, while high-margin products continue to deliver growth. We continue to improve mix, adjust price and control costs to absorb the pressure of rising raw material cost. For pork business, profit improved significantly, driven by the hog production segment that capitalized on favorable market conditions, improved performance indicators and lower hog raising cost.

Fresh meat business enhanced operational efficiency, reduced expenses and optimized product and channel mix. We continue to improve KPIs of hog production, reduce costs, increase efficiency and strive to achieve a competitive cost structure.

For Europe business, operating profit, 285 million, up 4%; packaged meat, $155 million, up 14%; pork business, $90 million, down by 31.3%. We leveraged the strength of our business model to counter market fluctuations, focused on the development of packaged meat business, pursued synergistic M&A, leading to sustained growth in volume and profit. We expanded the scale product offering and geographic footprint of packaged meat by integrating newly acquired operations. We adhere to the strategy of improving mix, adjusting price and controlling cost.

For pork business, we leveraged the vertically integrated business model. Profits of the segment improved significantly, mitigating the impact of declined hog prices.

The poultry business achieved growth in both volume and profit by improving management and expanding sales network, seizing market opportunities and controlling cost. We focused on the packaged meat segment expanded our supporting business and strengthened business footprint and successfully acquired People Foods from Poland and Wolf Group from Germany.

WH Group will continue to consolidate our global resources, leverage synergies, adhere to the business philosophy of improving mix, adjusting price and controlling cost and the strategy of industrialization, diversification, internationalization and digitalization to enhance our leading position. We will continue to focus on our core packaged meat business to achieve steady growth in volume and profit. We respond to evolving consumer market and promote product and channel transformation in China to achieve breakthrough in sales volume.

We mitigate the measures of increasing costs and drive growth in high-margin products to maintain high profit in the U.S. We continue to expand our business scale in Europe through organic growth and acquisitions, reducing our cost and improving our efficiency to increase profit.

We will explore opportunities to optimize and increase the processing capacity of pork business through M&A, new construction and facility upgrade, optimize product mix and sales channels to enhance profit. We will achieve a competitive cost structure for hog protection by improving the KPIs and effectively preventing and controlling diseases.

We will accelerate the development of our poultry business and enhance operational performance to further advance our meat diversification strategy and achieve synergistic development through complementary businesses. That's the end of my report. Thank you very much.

Thank you, Mr. Guo. Now let's enter the Q&A session.

[Operator Instructions] Let's invite the first question from the floor.

I'm from Morgan Stanley. I'm Lillian Lou. I have two questions. First of all, Mr. Guo, you talked about 2026 for packaged meat business. Mr. Wan has been paying very close attention to that and you have been making adjustments. So for this segment in China, if you look at hog prices declining continuously. So in 2026, with a rather high level of profit per ton last year, do you think you can achieve new heights this year?

And concerning packaged meat business in terms of sales volume, this been suppressed by demand. So it hasn't been very strong. What about this year? What is your thinking? And then about the U.S. side, packaged meat business, as you mentioned, you would like to expand high unit price products and high profit margin products. So what is the overall thinking about 2026?

And then taking one step back, Mr. Wan, the entire group is in a stabilization stage. What about the next 3 to 5 years? What would be the focal point in terms of return to shareholders? What is your plan?

[Foreign Language] So the question came from Lillian of Morgan Stanley. The first part relates to the packaged meats. As Mr. Guo mentioned that packaged meats is a strategic priority for WH Group. With respect to China, given the relatively low raw material cost, in light of the strong profit per metric ton performance in 2025, is there an opportunity to achieve even higher profit per metric ton in China for 2026?

And also, the volume of China packaged meats has been under pressure due to the demand in the market. And how should investors look at the demand for the volume for 2026? And with respect to the U.S. packaged meats, Shane, Mark, I will defer to you to answer this part. As we mentioned, we will promote more high unit cost, high-margin products. And what's the outlook for U.S. packaged meats, I guess, in terms of volume and profitability going forward? And the second question for Chairman Wan, what will be the company's strategic priority in the next 3 to 5 years? And what will be the shareholder return look like in the future?

So leaders, can you talk about the packaged meat business? Can we connect them?

Good evening. I'm [indiscernible] from Shuanghui. I'm joining online. Concerning the first question about packaged meat. In 2026, the hog prices have been dropping. So concerning our strategies...

Mr. Ma, I think you are too far from the mic. You are being cut off. You better start from scratch again.

How about now?

It's better.

I will answer the first question concerning about packaged meat business.

[Foreign Language] Response from Mr. Ma, CEO of Shuanghui on China packaged meats. Based on our latest observation in the market, the recovery of the demand is not very obvious and the competition remain very strong. So in 2026, our strategy for China packaged meats is to balance volume and profitability with a focus -- slight focus on volumes. So consistent with this strategy, our priority will be to expand market shares to step up our investment in marketing, in innovations, which means that we expect our volume will grow, but profit per metric ton may have a slight decline compared to 2025, but will remain at a very high level, probably the second highest in the company's -- in the context of the historical profit per ton.

So the second part relates to U.S. packaged meats, I will defer to Shane and Mark.

Shane and Mark, can you hear us?

Yes, we can hear you. Can you hear us?

It will be great -- it will be better if you can get closer to the mic.

Okay. Can you hear us now?

Yes, yes.

Okay. All right. Thank you, Lillian, and thank you, Xiaoming. So Lillian, packaged meats continues to be the earnings driver of the North American business. And this 2025 was the fourth consecutive year where we had achieved over $1 billion of segment profit. From a volume standpoint, we were up in 6 of the 10 $1 billion-plus categories that we operate in. We saw in our foodservice channel, we saw sales increase by 10% in fiscal 2025. But we also saw volume increases in that channel as well, which was up by about 2%. Xiaoming, I'll let you translate that, and then I'll continue.

[Foreign Language]

Again in 6 out of 10 of those $1 billion categories. But more importantly, that includes the higher-margin categories like daily meat, packaged lunch meat and dry sausage. So we grew dollar and unit share in 2025. And we also grew our points of distribution. We have 25 key categories, and we saw up points of distribution up about 5% for the full year. That was really led by performance in our prime Fresh. So our packaged meats, we feel really strong about going into 2026.

[Foreign Language] Thank you, Shane.

[Foreign Language]

So in response to your second question related to the company strategies, we have the four-pronged strategies with four themes: industrialization, diversification, globalization and digitalization. Specifically for industrialization, it means we realize the full benefits from a vertically integrated business model to achieve the synergies from the upstream, downstream -- between the upstream, midstream and downstream.

In hog production, in U.S., we are reducing our capacities. In China and in Europe, there is a slight increase. And for fresh pork and packaged meats, we'll maintain their steady growth. We want to achieve the optimal balance between the different businesses to maximize the synergies.

And secondly, diversification, it means we will while we continue to focus the meat processing business, we will continue to diversify -- while we continue to grow the pork business, we'll also diversify into poultry and beef as opportunities arise.

And thirdly, in terms of globalization, because we are a multinational company, we have a lot of synergies between different parts of our business. So through various trading opportunities, we want to achieve synergies between our business subsidiaries.

In terms of digitalization, we aim to use new technologies to improve our business management to use artificial intelligence, robots to replace some existing processes to improve efficiency, improve productivity and use these new technologies to transform our traditional meat processing industry.

And to execute on this strategy, we will have three priorities. First priority is that for our existing pork, poultry and packaged meat business, we will focus on the core existing business, expand their volumes. In the last couple of years, we have some pressures and declines in the volume of our business, and we will focus on recover the volume growth in China and the U.S.

And secondly, in terms of technology, we will introduce more technologies to improve the process efficiency, to reduce cost and expenses. And thirdly, in terms of acquisitions, we will selectively identify and execute acquisitions in pork, poultry and beef to further strengthen -- expand our scale and strengthen our business portfolio.

In terms of shareholder return, as you know, our dividend policy is that no less than 50% of the profit attributable to owners of the company. And as we -- we obviously will continue to adhere to our shareholder dividend policies. And as you see -- as you have seen, in the last couple of years, we have made some reorganizations, including the IPO of Smithfield and the separation of Molini Foods from Smithfield. And after these restructurings, all these subsidiaries performed very well, and we are also confident about the outlook.

For 2026, we have very good plans for volume, for revenue as well as the profit. And we are confident in our ability to deliver shareholder returns in 2026 and going forward.

So that's all from Chairman.

[Foreign Language]

[Foreign Language]

So Shane, Mark, two questions from BofA Research, Luo Chen, and they're all related to the U.S. business. The first is on U.S. hog production. It looks like the 2025 hog production profit per head was $18, which is one of the highest in the recent history. And in your previous guidance, you have guided hog production profit of $125 million to $150 million. But in the final results, it was $200 million, which has far exceeded the guidance. And in light of the recent conflicts in Middle East and the rising of crude oil and other commodities -- commodity prices, how will these higher raw material price impact the hog production business in the U.S. in 2026, such as the feed, the hogs? And how will that impact our profit per head in hog production?

And given our hedging strategies and how much visibility we have for 2026 hog production? And secondly, related to the recent Senate bill on the meat business. And the part obviously talked about the separation of different animal proteins, but also talked about the foreign investment in the U.S. meat industry. What's the possibility that the bill will be passed by the U.S. Congress and how long it will take for this to become a law? And what will be the impact of this bill? And what measures is the company taking to address this potential risk?

To the first question, U.S. hog production had a fantastic 2025. And I think you quoted a number that was $200 million. It was actually $176 million is where we finished the year. And that's really a reflection of both improved operations and market conditions. Inherently in that, if you look at our raising cost, raising cost year-over-year was down 4.8%, and that was really driven by an improvement in our wing pick cost, which if you go back and reflect upon the things we've talked about from our genetic strategy to improve our wing cost, we're really seeing that come through. So that was down about 8.1% and feed cost was down about 5%. So those things combined really drove that 4.8% decrease in raising costs, coupled with a really good hog market throughout 2025 allowed us to print earnings that were the best we've had since 2014. So Xiaoming, I'll let you translate that.

[Foreign Language]

For 2026, we are seeing some impacts from some of the things that you pointed out. So crude oil is up, which is having an impact on corn. So we've seen corn go up $0.20 to $0.30 a bushel over just the past few weeks, which will have an impact on our raising cost. We've seen diesel prices increase from $3.50 back in January to close to $5 now. So that's having an impact. But what we're focused on is making sure we're efficient.

So continuing to execute the strategies that we've laid out on previous calls from the genetic side, from the feed efficiency, livability health, all of those things that will play in. But we also use a number of hedging techniques where we are able to buy corn and soybean meal contracts and sell hogs on the futures markets to help us lock in some margin where we see opportunities. So we'll use a number of hedging techniques to help us make sure we're managing the business well. Right now, Mark, as you saw in the press release, we did lay out our guidance for next year. We think that guidance with what we know today is fully inclusive of any implications that we see on the horizon.

[Foreign Language]

Coming to the second question, there are a number of bills that are making their way through Congress and we're following all of those very closely. I think what's important for people to know is that when WH Group bought Smithfield, this was a approved transaction. Smithfield has been here for 90 years. Coming back to the U.S. stock market back in January provides an additional level of transparency to all stakeholders to let us -- to let them know who we are and how we operate. So we don't -- while we're following those closely, we're concerned from a standpoint of seeing where this goes. I think the merits of Smithfield, how we operate, our relationship with WH Group will stand up to any scrutiny we get. I'll let you translate that, and I'll talk about a couple of other things.

[Foreign Language]

Smithfield is subject to the same laws and regulations that all American businesses are. And I think what's important again for people to understand is, as a company, we partner with thousands of independent American farmers from our facilities across 39 U.S. communities and across 18 states. We pay, on average, about $2.2 billion in wages to over 32,000 U.S. employees. We've made hundreds of millions of dollars of philanthropic contribution to all of the local communities that we operate in. We've recently announced an investment in Sioux Falls, South Dakota that will be one of the largest investments in American agriculture ever. So we are investing in the U.S. And I think as that fact pattern becomes more talked about and more recognized. It really positions Smithfield well as really contributing to the U.S. agricultural economy.

[Foreign Language]

[Foreign Language] So two questions from the UBS. The first one on China's hog price. What will be the outlook of hog price for 2026? Given the recent unexpected sharp decline, there is some speculation that some more capacity will exit the industry, which will force the price to bottom out. So what's the outlook from

And secondly, on Europe, as mentioned, there are a lot of uncertainties in the economy in the commodity prices as a result of the recent events. So how will that impact the cost structure for the European business?

So Luis, maybe we'll defer to you after answered the first part.

[Foreign Language]

[Foreign Language]

So this is Shuanghui CEO, Mr. Ma. With respect to the outlook of hog price in China, based on the information we have, we believe we are of the view that the average price in 2026 will be lower than 2025, approximately 10% lower. And we believe the price in the first half will be lower, and there will be some recovery in the second half. And we do not believe the recent sharp decline in hog prices will force a lot of capacity to exit the market because currently, there are a lot of large industrialized hog producers in China. So the short-term fluctuations in hog prices will not impact their overall capacity strategies. So we do not believe the hog price recovery will be very steep.

Luis, maybe you want to take the second question relates to Europe cost structure.

Thanks, Xiaoming. Related to the impact of the Iran war in our business in Europe, we already see the increase in prices in fuel, gas and electricity. We have some coverage for the year, but the impact in our cost will depend on the duration of the actual situation in Middle East. We can see in medium term some increase in grain costs but we have some positions in the grain cost. And like we were doing in the past with energy crisis and inflation crisis after the Ukraine war start, we have measurements to mitigate this potential inflation situation with commercial action, mix optimization and productivity programs and efficiency programs that we were investing during the last years to try to optimize the energy use in all our manufacturing plants. Thank you.

[Foreign Language]

[Foreign Language]

So two questions, both related to China business. First is given the assumption that the hog prices will continue to be depressed in 2026, how will that impact the hog production and fresh pork business in China in 2026? And secondly, the packaged meat profit per ton has a small decline in the fourth quarter '25, whereas the volume has been flat. And the company has a good outlook for packaged meat volume in '26. And what's the latest progress in terms of the various measures have taken in terms of products and channels.

[Foreign Language]

With respect to hog production and fresh pork. For fresh pork, currently, the China market is still very fragmented. There are more than 5,000 players. And for the top 10 -- for the top players, the market share, the combined market share is less than 10%. So in the next few years, there will be consolidation of fresh pork in China. So we want to take advantage of lower hog prices to expand our market shares. So with this idea in mind, we will not be too fixed on the profit per head, and we will try to expand our scale while maintaining a moderate level of profitability.

For hog production, it's still a relatively underperforming business of Shuanghui. In 2025, it was loss-making. In 2026, we expect the raising cost will decline, but the hog price will also decline. So we will continue to -- it likely will continue to incur loss, but the loss will narrow. And in the future, we may also opportunistically expand the scale of hog production, but not in a capital-intensive way. We'll partner with other hog producers to lock in the hog supplies, to support our fresh pork and package business, to enhance the competitiveness of our overall business platform.

[Foreign Language]

So this -- the response on the packaged meats from Shuanghui Vice President, Mr. responsible for packaged meat business. Last year, if we look at the packaged meats volume by quarter, the first quarter was weak. The second quarter and third quarter stabilized. And in fourth quarter, we recorded a moderate or small growth. In 2026, our outlook is that the growth will be more meaningful for the following 5 reasons.

Number one, we have seen a sequential improvement quarter-by-quarter in 2025 because we have made a lot of reforms, for example, in professionalized or specialize our sales force and the effect of these reforms are taking effect -- are being realized gradually over time. And secondly, we are encouraged by the strong growth in the new channels, which has achieved more than 30% year-over-year growth in 2025 with 25% share of our overall mix. And its performance was also improving quarter-over-quarter in '25.

And thirdly, in light of the K-shaped consumption pattern in the market, we have launched high value for money products, which has exhibited strong growth momentum in 2025. And number four, we are also increasing our efforts in digitalizing our marketing and which will help us to have a more precise marketing strategy executions and to have a better effect in the overall marketing. And thirdly, we have also a lot of innovations in our channels. We have launched some pilot programs, which have achieved encouraging results, and we will continue to have a very accurate and a forceful support of different markets based on their local conditions. And with all these factors considered, we are confident in the meaningful growth in packaged mix volumes in 2026, and we hope that will also be reflected in the quarterly results that will be announced in a couple of weeks.

[Foreign Language]

[Foreign Language]

Shane, Mark, two questions from CICC on the U.S. business. First relates to the U.S. hog production. We have noticed a significant decline in volumes compared to 2024, which was consistent with our hog production capacity rationalization. And what's the latest progress in the capacity rationalization? And what's the kind of target or plans going forward for hog production capacity? And secondly, relates to the U.S. packaged meats. We noticed the decline in profit per metric tons in '25, primarily driven by the high raw material cost. And what's the latest outlook for packaged meats in '26, both profit and volume?

Okay. Xiaoming, I'll take the first one, and then Mark can take the second one. So as it relates to hog production, in 2025, we produced 1.1 million hogs internally. That's down from about 17.6 million at the high of 2019 and down from the 14.6 million that we produced in 2024. And that all was part of our overall rationalization process. We do expect, as we look at 2026, that we'll be up slightly above that 11.1 million really due to two things. One is productivity increases. As we've invested in genetics and health, we're seeing some productivity growth. And then second, keep in mind, there's -- for us in our fiscal year, there's a 53rd week in 2026.

But I would tell you, over the medium term, we're still targeting a reduction in our overall hog production capacity to 10 million hogs, roughly 10 million hogs, and that would be about 30% of what fresh pork needs. And again, we think that this is the optimal balance to keep that assured supply coming into the plants, but also balancing that with the overall cost risk commodity management or commodity side risk management. So we'll continue over the medium term to work toward that 10 million and 30%. But again, as we look at -- as we sit today and looking at 2026, we do expect it to be up slightly, again, due to those productivity increases that are coming from our current internal production and from that 53rd week that we'll see in 2026.

Xiaoming, I'll let you translate, and then I'll hand it to Mark to talk to the packaged meats question.

[Foreign Language]

On the packaged meats question, you're correct. We did experience significantly higher raw material markets in 2025 to the tune of about $525 million, which we were able to successfully offset a portion of through price and mix improvements, but certainly had an impact in terms of pressuring our margins per metric ton. We do anticipate some relief in the raw material markets as we move into 2026, but we're still faced with a very cautious consumer with high rates of inflation in the U.S. And so what we saw in 2025 is expected to continue as we start 2026 with that cautious consumer trading down across the branded portfolio and in some cases, into private label. But again, that really speaks to the strength of Smithfield's brands with brands that meet that consumer where they are within their pricing constraints. And then we do have about 40% of our business in retail and private label. So if they are trading out of branded and into private label, they're likely picking up a product that is produced by Smithfield.

We'll continue to focus on improving our mix and moving away from that more commoditized offering. So think of the seasonal ham business and into everyday use occasions of our private -- excuse me, our packaged meats business at a higher margin. I'd say the long-term algorithm is still intact for the packaged meats business, which includes continuing to improve that mix and improving the profitability in total and on a per metric ton basis. It's just really attributed to that cautious consumer right now.

[Foreign Language]

[Foreign Language]

So the question from JPMorgan on the European business. So in the last couple of years, European business or Morlini has made a couple of acquisitions to expand the footprint and are trying to build a platform as scalable as Shuanghui or Smithfield, but obviously, still relatively small. But apart from these acquisitions, what's the organic growth in Morliny? And what's the constraints for the organic growth in European markets? And also what's the group's overall strategy going forward for Europe?

Luis, you may want to take a first step.

Yes. Thank you for the question. The organic growth in the last year, we were growing 5% in our fresh pork business and 7% in our poultry business in volume. And in our packaged meat business, we have a small decline of volumes and the inorganic growth was giving us a total growth of 3%. I mean that still we are growing, like Chairman was mentioning in our strategy in our poultry business. In our packaged meat business, we are growing to organically through investing in some of the categories that we believe are future categories for us like ready meals, convenience food. And through M&As in the future, and I was mentioning in the last calls, our main strategy still is packaged meat business in Europe, poultry business and some areas like pet food that we have some acquisitions that still we have some possibilities to grow in the European market. Thank you.

[Foreign Language]

Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good evening, analysts and investors. Welcome to the Third Quarter 2025 Results Presentation of WH Group. I'm Guo Lijun, Executive Director and Chief Executive Officer of WH Group. Joining us today are members of the management teams from WH Group and our subsidiaries, Shuanghui Development, Smithfield Foods and Morliny Foods, including Mr. Wan Long, Chairman of the Board and Executive Director of WH Group; Mr. Wan Hongwei, Vice Chairman of the Board of WH Group and Chairman of Shuanghui Development; Mr. Ma Xiangjie, Executive Director of WH Group and President of Shuanghui Development; Mr. Liu Songtao, Executive Vice President and Chief Financial Officer of Shuanghui Development; Shane Smith, President and CEO of Smithfield Foods; and Mark, CFO of Smithfield Foods; Luis, CEO of Morliny Foods; Joanna Yan, Chief Financial Officer of WH Group, Vice President of WH Group Zhou Xiaoming.

Today's presentation will be divided into two parts. First, we will present the financial and operational performance for the first 3 quarters of the year, followed by the Q&A session. So let me walk you through the company's performance in the first 3 quarters. In the first 3 quarters of 2025, packaged meats sold was 2.231 million metric tons, 2.2% decline year-over-year. Pork sold was 2.967 million metric tons, 8.4% increase year-over-year. Revenue, USD 20.47 billion, 8.5% higher than last year.

EBITDA, 2.496 billion, 10.7% higher year-over-year. Operating profit, USD 1.92 billion, 7.3% higher year-over-year. Profit attributable to owners of the company, USD 1.168 billion, 8% higher year-over-year. Basic earnings per share, USD 0.0910 per share, 8% higher than last year. So in the first 3 quarters, the company has exhibited growth in volume revenue as well as profit.

Now look at the business performance by segment. Packaged meats contributed 50% of our revenue and 83% of our operating profit. Pork is 40% of the revenue and 20% of the profit. Other business is 8.7% of the revenue and contributed to a loss of $58 million, which includes other business as well as the corporate expenses.

If you look at the performance by region, North America represented 54% of the revenue and 51% of the operating profit. China represents 30.8% of the revenue and 37.6% of the operating profit. European business is 15.2% of the revenue and 11.5% of the operating profit. So North America generated more than 50% of both the revenue as well as operating profit. In the first 3 quarters of 2025, hog prices in China fell continuously due to sufficient supply and weak demand. In the U.S., performance of hog production business improved significantly as feed prices continue to decline while hog prices increased.

In Europe, hog prices decreased as hog supplies recovers. The number of slaughter hogs in China increased by 1.8% to 530 million heads in the first 3 quarters of 2025. In the U.S., the number of slaughter hogs decreased by 1.3% to 81.7 million heads in the first 8 months of the year. In the first 3 quarters of '25, the average hog price in China was RMB 15.1 per kilogram, a decrease of 10.7% year-over-year.

In the U.S., the average hog price was $1.6 per kilogram, up 13.2% year-over-year. In Europe, the average hog price was EUR 1.52 per kilogram, down 6.5% year-over-year. The average pork cutoff value in the U.S. was USD 2.29 per kilogram in the first 3 quarters, an increase of 8.7% year-over-year.

The industry market spread narrowed as hog prices increased more than pork values. In China, for the first 3 quarters, the operating profit was USD 724 million, 0.7% decline year-over-year. Packaged meats operating profit $689 million, year-over-year decline of 4.8%. Pork operating profit, $35 million, year-over-year decline of 14.6%. In North America, operating profit was $981 million, 16.6% higher year-over-year. Packaged meats operating profit was $796 million, 6.8% lower year-over-year.

Pork operating profit, $275 million, 2.43x higher than last year. In Europe, operating profit, $221 million, 1.8% decline year-over-year. Packaged meats, $111 million, 5.7% higher than last year. Pork, $78 million year-over-year decline of 22%. In terms of our strategies, WH will continue to consolidate global resources, leverage synergies, adhere to the business philosophy of improve mix, adjust price and control costs and the strategy of industrialization, diversification, internationalization and digitalization to enhance our leading position in the global meat industry.

In terms of our business priorities, number one, continue to improve the pork business, optimize cost structure, improve hog production KPI, grow the fresh meat sales volume and strengthen market competitiveness.

Number two, adhere to the two adjustment, one, control strategy for packaged meat business, expand market network, optimize sales channels and strengthen competitive advantage to drive steady improvement in sales volume and profits. Continue to optimize our business portfolio, steadily achieve protein diversification, further strengthen our global business footprint, mitigate risks, improve quality and enhancing efficiency. Number four, explore and leverage AI to continuously advance industrial intelligence, promote digitalization upgrades in production, sales and business management to reduce cost and enhance efficiency. The company will maintain the momentum of steady growth, build a solid foundation for the long-term sustainable development. So that's all for the presentation. Now we will move on to the Q&A.

[Foreign Language]

[Interpreted] The first question will come from the line of Luo Chen from BofA.

[Foreign Language]

[Interpreted] Two questions. First question relates to shareholder return. The company has declared a HKD 0.20 dividend -- interim dividend earlier this year. So if we add this up with the final dividend for '24. So the total was -- last year, the final dividend was HKD 0.40. So what's the company's guidance for the upcoming final dividends to be declared next year?

And the company has also declared a special dividend of HKD 0.48 this year because of certain capital market-related transactions. Does the company expect the possibility of further special dividends in the future? And secondly, related to the U.S. business. In the first 3 quarters, the U.S. hog production has achieved $15 per head of operating profit -- and considering the fourth quarter is typically a seasonally challenging -- challenging quarter for hog production business.

What is the company's outlook for profitability of hog production in the fourth quarter. And because the positive momentum for the hog price has been maintained for more than a year, and the higher hog prices has already put a lot of pressure on the operating profit of packaged meats, which has been visible in this quarter's performance. So what's the company's outlook for packaged meats profits per metric tons?

And what would be the company's outlook for hog production or fresh pork business for the next 2 quarters.

Just one more clarification. I'd like to clarify that I'm actually looking for the full year OP per head for the hog production business, whereas for the entire U.S. business, given all the moving parts of the 3 different business, what's our growth outlook for the entire U.S. business in the coming 1 or 2 quarters. Are we looking for positive growth in the coming 1 or 2 quarters?

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[Interpreted] In terms of shareholder return, we -- as you know, we have adjusted our dividend payout policy from no less than 30% of net profit to 50%. In the interim dividend, we paid HKD 0.20. But for the full year, our guidance is still to follow our policy of no less than 50% of the payout ratios. For the special dividends of HKD 0.48 that were paid this year, it is -- it is because of the IPO of Smithfield as well as the subsequent sell-down in Smithfield, which -- and we have returned all the proceeds from the sell-downs to the shareholders. At this point, we do not have any plans for further special dividends.

So the next question relates to the U.S. business. We'll ask Shane Mark to answer.

Yes. So I'll talk to the first question around the U.S. hog production. And you're correct. We've had a really strong year this year in hog production. And while a lot of that has been related to the overall revenue side of the business, meaning the pricing dynamics in hog production. There's also been a tremendous amount of work internally to improve our cost structures. And that's through things like genetic improvements, health and nutrition and things like that to improve our cost structure. We reissued guidance this morning. And as you saw the now expected return for 2025 is between $125 million and $150 million of segment profit in the hog production business.

And you're right, there is some seasonality when we look at the fourth quarter, but we expect the fourth quarter to be positive as well to end that year again, within that range of $125 million to $150 million. Now looking forward, we are seeing some strength in the futures markets as we look at the first and second quarter of next year.

Now -- right now, that's -- we'll continue to monitor that and follow that -- and as you know, we have different hedging techniques where we see opportunities to lock in acceptable levels of margin, we may take advantage of that. So we are bullish on hog production. I think the team there has done a nice job and you couple that with the -- again, the revenue, the strength in the revenue side of the equation, and we've had a really nice year in hog production.

Now packaged meats, again, we raised our -- we reaffirm our guidance in packaged meats for the remainder of the year, but we are seeing pressure in that business. When we look at the underlying commodity markets, you see [ bellies ] out, trim up and that's put pressure on the margins of that business, but we really -- we've been able to increase our pricing alongside that.

So really pleased with how that business has done as well. No, I think in the long term, and Mark, you jump in as well. But I think the long-term algorithm for packaged meat really hasn't changed. Right now, we're -- again, we're in a period of high raw material cost, which is pressuring margins to some extent, but we do expect to see that normalized and we'll come out of this cycle, even stronger than we went in. Mark, I don't know if you'd add anything there. .

Yes. No, I would just add that we continue to execute our strategies and stay true to those strategies. We continue to improve our mix higher -- a mix of higher value-added higher-margin items. We continue to appeal to consumers across that price spectrum and private label, which is a real competitive advantage for us. And we continue to do a really good job of taking costs out of our plants our supply chain and SG&A. So we expect to continue to outperform our peers from a margin perspective in packaged meats.

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[Interpreted] So 2 questions -- 2 questions from Lillian of Morgan Stanley. So the first question relates to China's packaged meat business. In the third quarter, China packaged meat business has achieved a very strong profit as well as profit per metric tons. The profit per metric ton of RMB 5,200 is probably a historical record. So what's the company's outlook for fourth quarter and 2026 in terms of profit per metric ton for packaged meats.

And for the strong profits of packaged meats, how much is driven by low hog prices and how much is driven by the company's management of cost as well as the inventories? And how much of this benefits of lower hog prices can be sustained or carried over to next year.

And also what's the company's outlook for hog prices for next year? And secondly, for fresh port business, the company has good volume growth in the fourth quarter. And what's the -- what are the changes in the product mix in terms of fresh and frozen? And what's the company's outlook in terms of profit per ton? And volume for fresh pork.

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[Interpreted] The first question relates to packaged meats, there are -- you are correct RMB that 5,200 per metric ton profit is a record level. And there are primarily 3 reasons. One is cost. Second is the expense and third is the mix. The hog prices has declined more than we had expected. And on the other hand, we didn't increase too much expenses. In the third -- in the fourth quarter, there are a few factors to consider.

First is that we will step up our investments in marketing to support our market competition. And secondly, we will promote more value for money products, which will contribute -- will have a good volume growth. So both of these 2 factors will be negative for profit per metric tons. So we believe and the fourth quarter profit per metric ton for packaged meats will be lower.

The full year and the full year guidance for profit per metric ton will be RMB 4,700 per largely consistent with last year. For next year, we believe the hog prices is expected to continue to be lower. But on the other hand, there will be a lot of competition in the market.

And our strategy will be to stabilize our profit and while we expand our volumes. So we do not expect to achieve higher profit per ton for packaged meats, and we will probably maintain around RMB 4,700 level.

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[Interpreted] The second question on fresh pork in the fourth quarter for the domestic meat, we believe the volume and the profit will both increase, but for the imported meat, the profit will decrease primarily because of the tariff. And overall, our profit for fresh pork will remain under pressure. For the strategy next year, in fresh pork, it is consistent with packaged meats. Our strategy is to stabilize our profit, but expand our volumes. So we want to maintain our profit per head while expand and grow our volumes. And this strategy will be followed in the next 2 to 3 years.

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[Interpreted] There are 3 questions from Veronica of UBS. The first one on WH Group profits. We noticed the net profit growth is faster than the operating profit growth, which suggests there are some items below operating profit that has positively impacted net profit, can the company provide explanations for these nonoperating items or accounting items? And will these items continue to impact the result in the fourth quarter. And secondly, related to the U.S. hog production business.

As Shane mentioned earlier, that we can use the hedging to lock some of the profits when the market opportunities are appropriate. So what's the company's strategy in terms of hog production hedging and what's the percentage of hedging? And thus, your comment earlier suggest that we will plan to step up the percentage of hedging positions next year.

And the third question, as Mr. Ma has commented earlier, the hog price will remain low next year. So how will that impact the Shuanghui hog production business in terms of our plan as well as profit.

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[Interpreted] So between the operating profits and net profit, there are a couple of nonoperating items such as gains from asset disposals, some gains from the insurance claims and some expenses related to the plant closures and hog production reformations as well as certain provisions for litigations. So compared to last year, we had higher gains related to insurance claims.

So that's a positive year-over-year compared to last year. And on the -- and also for the plant closures, last year, we had more expenses related to plant closures and the hog production reformations, which is -- the amount was recognized last year, whereas this year, the amount is very low. So that's also positive year-over-year. But there are a number of factors that may be offsetting each other.

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[Interpreted] And we will invite Shane and Mark to discuss the question related to hedging strategy.

Yes. I think as it relates to hedging, it's really important to view hedging as part of our overall broader strategy. So that works alongside both our operational and our financial decisions as we think about performance in hog production. There are timing differences in how hedging results are recognized. But overall, our approach is always really focused on supporting those overall performance objectives.

And you asked specifically about percent of hedging and things like that. And we don't give or talk about or give away how we're positioned in the market. But overall, the philosophy in hedging is really about risk management. And we're not trying to make market predictions. We really use hedging techniques to reduce exposure to different market price fluctuations. And we build hedging positions when conditions are favorable that enable us to really limit our downside risk. And so again, from a hedging standpoint, we don't give away -- or talk about the positions that we're in, but we -- that is kind of the philosophy we take. It's just part of an overall broader strategy as it relates to hog production.

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[Interpreted] So 3 comments related to your question, hog production in China. First, on hog prices, we expect the hog prices for 2026 will be lower in the first half and higher in the second half, but on average, will be RMB 1 per kilo lower than 2025. And secondly, for our hog production business specifically, the business has improved significantly compared to last year, and our cost has come down quite a bit.

But there remains a gap with the first-tier players in China. And the loss -- we continue to lose money in hog production in China, but year-over-year, it has shown a very substantial improvement. And thirdly, for 2026, we believe the speed of the magnitude of reduction in our own hog production cost will be larger than the decline in hog prices.

So we expect hog production business in China to be profitable next year versus a loss in '25, even though the profit will not be very substantial.

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[Interpreted] Two questions from Valerie of Goldman. First one on China packaged meat business. In third quarter, the packaged meat business volume has increased slightly or largely consistent with last year. But in the interim results earnings release, the management has talked about more ambitious growth of volumes for packaged meats in the third quarter and particularly in fourth quarter.

So what kind of challenges does the management see in China's packaged meat market? As mentioned earlier, the company expect to launch more value-for-money products in the fourth quarter? And what will be the company's guidance for volume in fourth quarter and 2026? And the second question relates to European business. Based on the numbers, it looks like the European hog production in the third quarter was under a bit of pressure. And what's the management's outlook for the fourth quarter for all the 3 business lines?

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[Interpreted] So as you noticed, in the first quarter, our volume has decreased significantly compared to last year. But in second and third quarter, it has remained -- we have stabilized the profit -- the packaged meats volumes and started to grow, and we expect more obvious growth in the fourth quarter, because of the following reasons.

First, for the first quarter, given the latest consumption environment, we expect to step up our investment in the marketing. In the first 9 months, we were -- our spending in marketing is more moderate. It has been more cautious. And given our strategy for packaged meats now is to stabilize the profit and while achieving -- while growing our volumes, we will step up our investment in marketing to support our distributors to support the business in new channels.

And secondly we have -- as we mentioned earlier, we have launched the specialization of our sales force and distribution network efforts this year. And the effects and the benefits of this specialization is -- the benefits are being realized gradually. So based on what we have seen, the effects of the specialization has achieved more -- better results in the second quarter and the third quarter compared to the first quarter.

So we believe these efforts will continue to achieve more effects. And thirdly, the new channel has achieved very good growth this year. In the first quarter, the year-over-year growth was 9%. Second quarter, it's more than 30% and the third quarter was around 35%. And we expect the new channel to grow faster in the fourth quarter. And number four relates to the value-for-money products, because we are -- we have noticed the divergence of the consumption demand in China, where there are good growth in both the premium products as well as the value for money products.

So our sales of these value-for-money products were also gradually stepping up. The volume will gradually increase during the course of the year. And fifthly, we have also done a lot of work in innovation and digitalization empowerment.

And all these efforts started in the beginning of the year, and they will yield results in the fourth quarter. In terms of the outlook for next year, as you see, we have very good momentum in 2025. After a challenging first quarter, we have stabilized our volumes in the second and third quarter and we will be growing our volumes in the fourth quarter. We expect to keep this good momentum into 2026 and achieve mid-single-digit growth in volumes. And a lot of our strategies implemented this year were really sustainable. They will -- we -- in the future, we will continue to execute on these strategies to achieve more -- to achieve a sustainable growth of packaged meats.

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[Interpreted] The second question relates to European business. We invite our CEO in Europe, Luis to answer -- to take this question.

Good afternoon, everybody. Related to the performance of our hog production in the third quarter, the lower performance is mainly drive for the decrease of the peak price in Europe during the third quarter and year-to-date. 2024 was a record year. And during this year, we saw a decrease of prices of 10% in the European market. We keep focus in controlling our cost. Our business has some of the most competitive cost in hog production in Europe. And the only driver really is the peak price. Related to the forecast for the last quarter of the year in the different segments of the business, peak price carry on going down, and we are having plans to reduce our cost, and we have some favorable conditions with the grain price that can adjust the margins in the hog production segment.

Like we are working a vertical integration. We expect that the decrease of the peak price is going to be favorable to all our vertical integration, and we expect better results in our fresh business in and in our packaged business. In our poultry business for the last quarter of the year, we see a strong market in Europe.

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[Interpreted] So 2 questions from Tiffany of Citi. The first one is third quarter EBITDA of WH Group has increased more than the EBIT, which suggests that depreciation and amortization has increased year-over-year. What's the reason behind that? And what's the outlook for guidance or outlook for this for the fourth quarter and 2026? And second question relates to China fresh pork business profit per metric ton. So can we interpret the management's view as that if the tariff situation remains as of today's status quo, will next year's profit per metric ton for fresh pork will remain consistent with the third quarter of '25.

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[Interpreted] So the first question, the D&A for the first 9 months of this year is largely consistent with last year. They are both around USD 460 million. The reason there is some disconnection in terms of the growth between EBITDA and EBIT is because in the operating profit items, we also have some benefit from some of the one-off expenses or one-off items in the third quarter.

For example, there is insurance gain from insurance claim, which is around $70 million and also reversal of some litigation provisions of around $9 million.

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[Interpreted] So in the current tariff situation as well as the competitive dynamics as well as our strategy to grow the business, we have adopted a strategy to maintain a relatively low profit per head in fresh pork to grow our volumes. In 2026, we expect to follow the strategy of stabilized profit while growing our volumes, but to clarify here, when we talk about stabilizing profit, we -- what we're talking about is profit per ton. So we will stabilize our profit per ton, but not our overall -- the total profit, because as volume grows, our total profit will grow. And in terms of profit per ton for '26, we believe it should be similar to '25 average.

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[Interpreted] Do we expect the fourth quarter --

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[Interpreted] So the follow-up question was, do we expect the fourth quarter profit per head to improve compared to the third quarter? And what's the reason? So the answer is that for the fourth quarter, we expect the volume to achieve double-digit growth and the profit will also improve because in third quarter, the profit was impacted by certain write-downs of frozen inventories.

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[Interpreted] So 2 questions from CICC. The first on China packaged meats and second on U.S. packaged meats. On China packaged meats, so what's the company's growth target of the new channels in 2026? And the company has -- in the traditional channels and how much pressure does the company face? And do we see any signs of easing or improvements in the traditional channels?

And then on U.S. packaged meat business, so what's the magnitude of the price increase given the increase in the raw material prices between second quarter and third quarter this year? And if we expect the hog price to remain at elevated level next year, what will be the profit per metric ton guidance for U.S. packaged meats?

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[Interpreted] So for the new channels, the year-over-year growth across the 4 quarters is as follows: 10% growth in the first quarter, 20-plus percent growth in the second quarter and more than 30% in the third quarter. And in the fourth quarter, it is looking like 40% growth in the fourth quarter.

And we believe the average growth will be 35% this year. And the next year target will be 30% growth. For the traditional channel, it is declining year-over-year, and it is also dragging the overall packaged meats volume performance. So we have taken a lot of measures to hopefully achieve growth -- positive growth next year to stop the declines. So if we are successful in that and combined with the growth in new channels, we expect the packaged meats in China to achieve mid-single-digit growth next year.

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[Interpreted] And then the next question on the U.S. packaged meats to the U.S. team.

Yes. So this is Mark. I'll take that. So through the first 9 months of the year, revenues for packaged meats on a per unit basis are up about 6%, while primary raw material inputs are up closer to 16%. So we've been able to mitigate that margin compression with operational excellence within the plants and our supply chain and within SG&A, because what we've been faced with is an environment where bellies have increased upwards of 26%, trimmings are up between 20% and 40% and ham are up 10%. We don't -- we understand that across retail, consumer dollars are stretched. And the grocery and food service industry are seeing people spend less and trade down to less expensive items. So we've been able to maintain steady volume in this environment without resorting to aggressive short-term price promotion.

So we're using innovation, improved mix and brand building. So the good news is that protein is winning and pork is a great value relative to chicken and beef. And we believe that we're better positioned than most companies due to our broad portfolio, which includes both branded and private label.

So we're able to better meet consumers at points all across that value chain. And that if that consumer shifts to private label, that's really a competitive advantage for us because about 40% of our mix at retail is in private label. So in terms of profitability per metric ton into 2026, we don't provide guidance, but we do expect that we will continue to see -- or in 2026, we expect a modest improvement in the raw material outlook based on increased supply.

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[Interpreted] And now we can conclude today's earnings release, and we think we have a comprehensive discussion in the earnings call. We thank everyone for your participation.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]