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Economic downturn affects Agfeed

Shares of AgFeed Industries fell to their lowest in almost in two years after the animal-feed and pork company slashed its full-year profit outlook, weighed down by a fall in prices of hogs and the overall economic downturn.

AgFeed retracted its 2009 outlook saying it would scale back its planned expansion of its hog farm business during the current downturn. The company said its business was being hurt by a decrease in the price of hogs, a surge in the supply of swine and the overall economic downturn in China and worldwide.

"The hog market in China has been softening up. The prices have been falling over the past six months and the company did not do a very good job in communicating that with the shareholders," Rodman & Renshaw analyst Joe Giamichael said.

For the third quarter, the company's net income quadrupled to $8.2 million, or $1.25 per share.

AgFeed lowered its full-year outlook for adjusted earnings to 55 cents to 65 cents a share, from $1.10 to $1.20 a share it forecast earlier. Due to the current volatility in Chinese and worldwide markets, the company said it was retracting its 2009 outlook of selling 1 million hogs, which would have generated revenue of about $250 million.

Source: Reuters

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