China: Zhongpin to upgrade its pork facility
Zhongpin Inc. plans to upgrade chilled and frozen pork facility in China and increase annual production of pork.
Zhongpin Inc. a leading meat and food processing company in the People's Republic of China ("China"), today announced plans to upgrade its chilled and frozen pork production facility in Changge City, Henan Province and increase its annual production capacity of chilled pork by 22,000 metric tons ("MT").
The Company's existing chilled and frozen pork production lines at the Changge City facility have a total annual capacity of 59,760 MT. Without causing any interruption to its current production, the additional capacity of 22,000 MT will increase the total annual production capacity of the Changge City facility to 81,760 MT.
Growing demand for pork
Zhongpin's management decided to upgrade the Company's production lines to meet the growing demand for chilled pork products in Central China. The upgrade will involve enhancing the pre-cooling function of the slaughtering lines, increasing production capacity of chilled pork, and modifying the capacity design.
In addition, Zhongpin will improve its cooling systems, sewage disposal systems, and other supporting facilities, by installing state-of-the-art equipment and machinery. The overall planned capital expenditures for the facility are expected to be approximately $6.0 million. The upgrade will be completed by the end of 2009.
"We are pleased to announce our plans to upgrade our chilled and frozen pork facility in Changge City and increase our chilled pork production capacity. Our annual chilled pork sales increased from $71.8 million in 2006 to $289.3 million in 2008, representing a 101% compound annual growth rate.
Despite the decline in live hog prices and pork prices in the first quarter of 2009, our sales revenue from chilled pork increased nearly 57% to $86.3 million, representing 56% of our total revenue during the first quarter," commented Mr. Xianfu Zhu, Chairman of the Board and CEO of Zhongpin. "With the rapid growth in the new middle class population in China, acceptance of chilled pork has increased significantly over the past few years. We are very confident that our decision to upgrade and expand our capacity will enable us to effectively adjust the product categories and meet the growing demand for our chilled pork products, and increase our market share."
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