CHINA: Zhongpin reports record revenues despite Q4 slowdown
Zhongpin has seen record revenues in its full-year results for 2008, the Chinese meat company said, despite a weaker fourth quarter than expected.
Based on preliminary results, Zhongpin generated record revenues of approximately US$540m for 2008, an increase of around 85.3% on 2007 levels.
The company said the strong growth was attributable to the growing demand for the company's products, rapid capacity expansion and the addition of new geographic markets during the year.
However, it admitted that revenue was slightly lower than the company's guidance of $550m to $570m 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 said it expects its 2008 fiscal year gross margin and net margin to be in line with the company's previous guidance.
Looking ahead, Zhongpin said it expects revenues for 2009 to be in the range of $780m to $810m.
"Management expects strong revenue growth in 2009 due to anticipated growth 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 utilisation levels in the first half of 2009," a statement said.
Gross margin for the full year 2009 is expected to be around 12% with net margin of at least 6%.
"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," it said.
Zhongpin expects fully-diluted earnings per share in the range of $1.50 to $1.63 per share, assuming a fully-diluted share count of 30.7m shares outstanding. This guidance excludes the impact of any future acquisitions, it added.
"We are pleased with our strong performance in fiscal year 2008, which reflected the growing recognition of our brand and our ability to meet consumer demand for nutritious and high quality pork products. Our record financial performance in 2008 was also driven by the successful execution of our capacity expansion plans, supply chain integration and sales distribution capabilities in new and existing markets," said Xianfu Zhu, CEO of Zhongpin.
"During the fourth quarter of 2008, demand for pork products declined as the worldwide economic slowdown began to impact the Chinese economy. Our growth strategy for 2009 is to achieve robust revenue growth by increasing our market share and improving our customer service. We plan to accomplish this by establishing additional regional sales and distribution centres, developing new products, and optimising sales channels."
Chinese meat processor Zhongpin today (11 May) hailed "solid" first -quarter results as expanded production capacity boosted revenues....
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