Zhongpin earnings advance 10% in 2011

by Meat&Poultry Staff
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BEIJING and CHANGGE, China – Zhongpin reported net income of $64.2 million in fiscal 2011, an increase of 10 percent from $58.3 million in 2010.

The company's revenues advanced 54 percent to $1,456.2 million in 2011 compared to $946.7 million in 2010. Basic earnings per share decreased 0.6 percent to $1.66 in 2011 from $1.67 in 2010 on average basic shares outstanding that were 10.5 percent higher than 2010. Diluted earnings per share increased 0.6 percent to $1.66 in 2011 compared to $1.65 in 2010.

"We continued to deepen our penetration in our current markets and aggressively increase our geographic markets, sales locations, customers and operations in 2011 to support higher sales, profits, and operating cash flow in the years ahead, so the year was good in operations," said Xianfu Zhu, chairman and chief executive officer. "Our financial results in 2011 reflected new aggressive price competition in the markets and our higher expenses in operations, promotion, marketing, and sales to build our market share in 2011 and prepare the company for increasing success in the future."

In 2011, Zhongpin added 201,000 metric tons of annual capacity for pork and pork products to bring total capacity at year-end to 904,760 metric tons, the company said. Zhongpin had an annual capacity of 728,760 metric tons for chilled and frozen pork, 126,000 tons for prepared pork products, 20,000 tons for pork oil as of Dec. 31, 2011.

In its guidance for 2012, Zhongpin said it expects sales revenue to be within range of $1.55 billion to $1.72 billion for 2012. Gross profit margin is projected to be 8.6 percent to 10.2 percent. Net profit margin is forecast to be 3.3 percent to 4.2 percent, the company said. Diluted earnings per share for 2012 is expected to be $1.36 to $1.92 per share, assuming average diluted common shares outstanding of about 37.5 million shares in 2012.

The company is making investments in several projects aimed at strengthening its prepared pork operations, including:

  • Approximately $58.5 million for a new production, research and development, and training complex in Changge, Henan province. The new facility will have a production capacity of about 100,000 metric tons for prepared pork products. Adjacent to this new production facility, we also plan to develop a center for research and development, training, and quality assurance and control. Construction for the first phase, with a production capacity of approximately 50,000 metric tons for prepared pork products, started in the second quarter of 2011 and is scheduled for completion by the second quarter of 2012.
  • Approximately $10.5 million in a by-product processing plant in Changge, Henan province, to product sausage casings and the raw material used to make heparin sodium. Construction on the plant is scheduled to begin in the first quarter of 2012 and operations should begin in the fourth quarter of 2012, the company said.
  • Approximately $18 million in a cold-chain logistics distribution center in Anyang, Henan. This distribution center will have processing capacity, a temperature adjustable warehouse with a floor area of approximately 27,000 square meters, a distribution center, and a quality control center. The distribution center will be used for third-party cold chain logistics service. The company said it expects this distribution center to be operational in the third quarter of 2012.
  • Approximately $87.5 million in a chilled and frozen food processing and distribution center in Kunshan, Jiangsu near Shanghai. The center will be built in three phases. The first phase will include a processing center, cold chain logistics center, and business complex. Zhongpin said it expects to invest about $35.0 million on the first phase that should be operational in the fourth quarter of 2012.
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