Zhongpin '08 sales up more than 85%

by Bryan Salvage
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CHANGGE CITY, CHINA – Zhongpin Inc. announced preliminary unaudited sales for the fiscal year ended Dec. 31 of almost $540 million, an increase of approximately 85.3% from $291.4 million in 2007. This growth is attributable to increasing demand for the company's products, rapid capacity expansion and adding new geographic markets in 2008.

Revenue, however, was slightly lower than the company's guidance of $550 million to $570 million due to lower-than-anticipated sales volume and selling prices during the fourth quarter of 2008, partly resulting from the impact of the global economic downturn on the Chinese economy. The company expects its 2008 fiscal year gross margin and net margin to be in line with the company's previous guidance.

Zhongpin expects sales for the fiscal year ending Dec. 31, 2009 to range between $780 million to $810 million. Management anticipates strong revenue growth in 2009 from new markets and additional capacity from the company's new chilled and frozen pork and prepared meat facilities as they ramp up to target utilization levels in the first half of 2009.

Meanwhile, gross margin for the full year 2009 is expected to be approximately 12.0% with net margin of at least 6.0%. Due to the adverse impact on China's meat-processing industry caused by the global economic slowdown, and the company's primary focus on rapidly expanding its market share, management expects margins for fiscal year 2009 to be slightly below the 2008 levels.

The processor expects fully-diluted earnings per share in the range of $1.50 to $1.63 per share, assuming a fully-diluted share count of 30.7 million shares outstanding. This guidance excludes the impact of any future acquisitions.

Zhongpin specializes in processing pork and pork products, as well as fruits and vegetables, in the People’s Republic of China. Its distribution network in the P.R.C. spans 24 provinces and includes more than 2,995 retail outlets. Zhongpin's export markets include the European Union, Eastern Europe, Russia, Hong Kong, Japan and South Korea.

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