Zhongpin net income, revenues up in 2009

by Bryan Salvage
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NEW YORK – Zhongpin Inc., a leading meat and food processing company in the People's Republic of China, announced for 2009 net income increased 45.2% to $45.6 million from $31.4 million in 2008. Net revenues increased 34.5% to $726.0 million from $539.8 million in 2008. Basic earnings per share increased 39.6% to $1.48 in 2009 from $1.06 in 2008.

"The year 2009 was memorable for us, with several great successes," said Xianfu Zhu, chairman and chief executive officer. "We began production in two new plants and one upgraded plant in 2009 that added about 138,000 metric tons of annual capacity for pork products to Zhongpin. Of that, 102,000 metric tons was for chilled and frozen pork and 36,000 metric tons was for prepared pork products.

"Our return on average assets was down just a half point -- 11.0% in 2009 compared with 11.5% in 2008,” he added. “We believe this was a major achievement, since we invested aggressively in new production facilities to support our market and sales expansion in 2009.

In January 2009, the company began operating its new chilled and frozen pork plant in eastern Henan province. It has an annual capacity of about 80,000 metric tons. Total new investment was about $17 million. In August 2009, the company upgraded its pork facility in Changge and added an annual production capacity of 22,000 metric tons for chilled and frozen pork.

Zhongpin began operating its new prepared pork products facility in Changge in December 2009. It has an annual capacity of about 36,000 metric tons. This facility's advanced equipment and machinery imported from top-tier international manufacturers will produce quick-freeze sausages and other prepared pork products catering to varying consumer tastes. The company expects to reach target capacity utilization in this plant in the second quarter 2010. Total investment was $21 million.

Total investment in the facilities brought during 2009 was about $55 million.

At year end 2009, the company’s annual capacity for chilled and frozen pork was 494,760 metric tons, and for prepared pork products, 90,000 metric tons.

In January 2010, Zhongpin began production in its new chilled and frozen pork plant in Tianjin. It has an annual capacity of 100,000 metric tons, of which 70% will be chilled pork and 30% frozen pork. The company will begin constructing a new prepared pork products plant in Tianjin in April 2010 that will have an annual capacity of about 36,000 metric tons. Production is expected to start in October 2010 and should achieve target utilization in the second quarter 2011. Both state-of-the-art Tianjin facilities are expected to cost about $61.0 million in total.

By the end of 2010, the company believes its annual capacity will be at least 541,760 metric tons for chilled and frozen pork, 126,000 metric tons for prepared pork products, and 20,000 metric tons for premium pork oil.

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