Zhongpin net income, revenues up in 2010

by Bryan Salvage
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NEW YORK – Zhongpin Inc. announced for 2010, net income increased 28% to $58.3 million from $45.6 million in 2009; basic earnings per share increased 13% to $1.67 from $1.48 in 2009 with average basic shares outstanding being 13% higher than 2009; and revenues increased 30% to $946.7 million from $726.0 million in 2009.

"2010 was a very good year in operations and financial results, especially given some unusual sustained increases in hog prices during part of the year,” said Xianfu Zhu, chairman and CEO. “Our revenues increased mainly due to our capacity expansions, higher sales to existing customers, new sales volume in new geographic markets, expanded points of sales, new customers and emphasis on our higher-margin products.”

Zhongpin expects to invest $58.5 million to build a new production, research and development and training complex in Changge, Henan province, excluding the cost of land use rights it has already obtained. When completed, this new facility will have a production capacity of approximately 100,000 metric tons for prepared pork products.

Adjacent to this new facility, the company expects to develop a center for research and development, training, and quality control. Construction for the first phase with an annual production capacity of approximately 50,000 metric tons for prepared pork products is scheduled to start in the first quarter of 2011 and to be completed by the third quarter of 2011. The second phase, with a production capacity of approximately 50,000 metric tons for prepared pork products, is scheduled to be completed by the fourth quarter of 2012. Zhongpin plans to open the research and development and training center by the fourth quarter of 2012.

To further expand its business and grow Zhongpin into a national brand, the company intends to expand production into other provinces where pork is traditionally consumed in significant quantities and in which there is a sufficient hog supply. To minimize risk when expanding into new markets, the company sometimes enters certain markets by leasing, rather than purchasing or constructing its production facilities.

In 2011, Zhongpin expects demand for pork in China and the results of the pork and pork products segment of its business to remain strong. While supply is expected to be ample, live hog prices are expected to increase in the first half of 2011. Zhongpin anticipates that its gross profit margin in 2011 will remain stable.
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