August 11, 2010

 

AgFeed swings to quarterly loss

 

 

AgFeed Industries Inc. swung to a quarterly loss after severe floods hampered operations at the animal feed and pork company's farms in China, sending its shares down 13% to a 52-week low.

 

AgFeed, which has its primary operations in China, said the movement of feed and live animals was severely disrupted in the second quarter and this led to the loss of over 16,000 live animals in addition to the planned culling of 3,000 sows.

 

Chairman Li Songyan said the company is still in the process of repairing the infrastructure damaged in and around our facilities in Fujian, Jiangxi and Hainan.

 

The heavy rains during the summer triggered flash floods, inundated crops, disrupted traffic and telecommunications in South China, resulting in direct economic losses of around US$12.13 billion. The worst hit provinces and regions included Fujian and Jiangxi.

 

The company, however, said it was optimistic about its operating performance for the balance of the year, as hog prices have started to climb up.

 

For the second quarter, the company reported net loss of US$2.95 million, or 7 cents a share, compared with a profit of US$1.23 million, or 3 cents a share, a year ago.

 

Revenue fell 2% to US$37.7 million. Shares of the company were down 20 cents at US$2.56 in morning trade Tuesday (Aug 10) on Nasdaq. They touched a low of US$2.40 earlier in the session.

 

Earlier, the pork and animal feed producer agreed to acquire US hog production company M2P2 LLC for US$16 million in cash and stock. M2P2 teamed up with AgFeed last May to establish a management company in Asia, AgFeed International Protein Technology Corp., which is focused on introducing the Western model of pork production to China and Asia.

 

The complex will have annual production capacity of up to 600,000 hogs when completed during 2012. AgFeed has also said it plans to sell 20% of its animal nutrients feed unit in a stock offering as it focuses more on compound and concentrated feed markets, which make up most of China's current expanding production.