March 15, 2012

 

Zhongpin posts strong 2011 results

 

 

Zhongpin, one of the leading Chinese meat and food processing companies, reported rising revenues and net income for last year.

 

Revenues increased 54% to US$1.46 billion in 2011 from US$946.7 million in 2010, while net income increased by 10% to US$64.2 million in 2011 from US$58.3 million in 2010.

 

Over the coming year, Zhongpin expects that sales revenues should be within a range of US$1.55 billion to US$1.72 billion for 2012. Gross profit margin is expected to be within the range of 8.6% to 10.2%, while net profit margin in the range of 3.3% to 4.2%.

 

Zhongpin added 201,000 tonnes of annual capacity for pork and pork products during 2011 to bring total capacity at year-end 2011 to 904,760 tonnes.

 

It will be investing about US$10.5 million in a by-product processing plant in Changge, Henan province, to produce sausage casings and the raw material used to make heparin sodium.

 

Annual production capacity at the new processing plant is estimated at 100 million metres of casings and 300 billion units of the raw material for heparin sodium. The construction is scheduled to start in the first quarter of 2012 and operations should begin in fourth quarter of 2012.

 

Xianfu Zhu, Chairman and CEO of Zhongpin, said: "We continued to deepen our penetration in our current markets and aggressively increase our geographic markets, sales locations, customers, and operations in 2011 to support higher sales, profits, and operating cash flow in the years ahead, so the year was good in operations.

 

"Most of our 54% increase in sales revenues in 2011 came from our pork products prices for which rose an average of 44% for the year, on tonnage that was up 7%. With the prices of both hogs and pork expected to decline from 15% to 20% in 2012, it will be difficult to report higher results in 2012 compared with 2011.

 

Zhu explained that the lower margins are expected because the company is facing tough competition in the markets and must simultaneously prepare the company for improved operating and financial performance.

 

Zhongpin developed and launched 79 new products in 2011, most focused on regional flavours and convenient preparation methods that were attractive in China, Zhu said.

 

"We plan to continue building a leading national brand by gaining higher market share and prudently increasing our markets, processing plants, and cold-chain distribution networks to satisfy the increasing demand for our high quality products. The result should be growing value created over the years to benefit our shareholders," he added.