September 1, 2004



China's New Hope Group's Restructuring See Good Results from Its Dairy Business


An eFeedLink Exclusive Report

One of China's major feed producers, New Hope Group, recently announced that it has posted a net profit of RMB$74.79 million for the first half-year of 2004, a significant rise of 14% compared to the same period a year ago. 


There has been an evident change in the company's profit earning structure. Earning contribution from the dairy business has risen remarkably which accounted for half of the company's net profit.  


New Hope Group has traditionally been an animal feed producer in China.  However, its complete feed production has dropped for the first half of this year. 


The Group's net profit from feed sales has dropped by 2% during the first half-year, contributing a modest 25% to the company's core business profit margin.  After accounting for production cost, administration fee and other overheads, there was hardly any earning contribution from its feed business.


With feed output in China reaching saturation point analysts said earning from feed production has generally been on the decline in recent years. This has caused many of the country's biggest feed producers to diversify their businesses.


A good example is New Hope Group's business reshuffle. The Group's 48% net profit for the first half-year of 2004 from its dairy business is good evidence that its business restructuring in recent years has begun to produce results.