AgFeed Industries one of the largest commercial hog producers and the largest animal nutrients company in China, has announced financial results for the third quarter and first nine months of 2009.
Dr. Songyan Li, AgFeed's Chairman, commented that, "I am pleased to report that nine months into our transition year we are accomplishing much of what we set out to do. I am happy with the operating results in both of our business segments in spite of a number of market challenges that we faced in the hog industry and in our regional economy.
Our operating income for the third quarter was a commendable $3.71 million. We finished the quarter with a strong balance sheet and $36.5 million in cash to fund our operations and growth. Our animal nutrients business performed exceptionally well in the third quarter, aided by the recent implementation of the Food Safety Laws and the Green-Certified label on our products.
Western hog production
Dr. Li continued, "Earlier this year we announced our intention to adopt the Western model of hog production. We are well on our way to a full transition in 2009 to that model with our new alliance with Hypor, the formation of AgFeed International Protein Technology, our joint venture with M2P2 LLC, and our ongoing investment in upgrading our existing farms. As we continue to invest in our genetics programs, improve our bio-security and upgrade our environmental protection systems over the next 25 months we believe that AgFeed will become the standard for top quality, green-certified pork in China."
In discussing AgFeed's animal nutrients business, Junhong Xiong, AgFeed's Chief Executive Officer, asserted, "Our revenues of $17.1 million in the third quarter of 2009 were significantly higher, reaching approximately 80% of the revenues we posted for the first half of 2009. We expect that our animal nutrients business segment will remain strong through the end of 2009, meeting and exceeding our projections of 100,000 metric tons sold in 2009." Mr. Xiong added, "AgFeed is responding to the market demand for "complete" feed with plans to upgrade and expand our production capabilities in this key market segment. We believe this will provide an opportunity for us to triple our animal nutrient business revenues by the end of 2011."
Expanding breeding hog inventory
Gerard Daignault, AgFeed's Chief Operating Officer, commenting on the Company's hog business, said "AgFeed is focused on bio-security and expanding its breeding hog inventory. The recent pure lines stocking of the Lushan Breeder Farm has produced record birth-rate results. AgFeed's second breeder farm, Ganda (Guangxi Province) will begin its pure lines stocking in December. The building of the Wunnin nucleus farm located in Jiangxi Province was completed on November 3 and will also be stocked with world class Hypor genetic breeding stock." Daignault added, "AgFeed's first Western-model farm located in Da Hua (Guangxi Province) opened this morning China time, with a groundbreaking ceremony sponsored by the PRC regional government. We currently anticipate that these facilities will house 10,000 sows producing 250,000 hogs by 2011 helping to meet the goal of selling 2.5 million hogs from 2009 to 2011."
Edward Pazdro, Chief Financial Officer of AgFeed International Protein Technology, reported, "Dr. Songyan Li is working with regional Chinese governments in targeted areas to introduce our joint venture concept. He is pursuing the identification and selection of additional farm sites and negotiation of agreements with local government officials, banks and farmers that will provide us with the opportunity to bring the success of our experience in Da Hua to other locations, affording AgFeed and AgFeed International Protein Technology the opportunity to expand their Western-model hog production model to new sites."
• Agfeed Inc