Yurun expects higher sales volume in 2009

China Yurun Food Group Ltd, the country's major hog processor, expects higher sales volumes and improved margins this year as falling pork prices and government stimulus spending push up demand, the company's chairman, Zhu Yicai said Tuesday (Mar 24).

Zhu said the company is targeting a 30-percent gain in its frozen and chilled pork products sales volume, as well as a 10-percent increase in downstream meat products. He added that pork prices are expected to fall an average of 20 percent this year due to sufficient supplies.

China's wholesale pork prices have decreased by about a third from their February 2008 peak as farmers replenished their inventories which were devastated by diseases and snowstorms.

According to Zhu, Yurun's gross profit margin fell to 13 percent in 2008, down from 14.1 percent a year earlier, as the sharp fall in pork prices in the second half of last year hurt margins of its upstream frozen and chilled pork products.

With the company adopting a flexible pricing strategy amid the economic downturn, Yurun's profit last year jumped 32 percent to HK$1.14 billion (US$147.1 million).

Meanwhile, Zhu said China's pork imports may fall this year as its domestic hog inventories increase and pork prices decline.