AgFeed: First half results – revenue increase/ decrease in hog division
AgFeed Industries, Inc., one of the largest independent hog production and animal nutrient companies in China, announced its results for the first half of 2010.
Revenue for the first half reached $90.5 million an increase of 26% compared to the first half of 2009.
Production volumes increased by 92% in the company's animal nutrition division, and decreased 15% in its hog division as compared to the same period in 2009.
During the second quarter the Company faced an extremely difficult operating environment as a result of a series of severe floods throughout its area of operations. The floods led to significant operating disruptions on the Company's farms and on the transportation infrastructure supporting the operations. The movement of feed and live animals was severely disrupted. These factors led to the loss of over 16,000 live animals in addition to the planned culling of 3,000 sows.
Dr. Songyan Li, AgFeed's Chairman stated, "In my life time I have never experienced flooding and devastation of the magnitude that we faced from late April into early June. We are still in the process of repairing the infrastructure damaged in and around our facilities in Fujian, Jiangxi and Hainan. I have been very proud of our team and the way that they have rallied to answer the challenge faced by our Company and nation." Dr. Li went on to observe that, "The domestic inventory of hogs has changed dramatically and we are already seeing a rapid rise in market prices; we are optimistic about our operating performance for the balance of the year."
Mr. Junhong Xiong, AgFeed's President added, "Our investment in our western farm projects in both Dahua and Xinyu continue apace as we simultaneously modernize our legacy farm system reducing the amount of personnel required on these farms. In spite of the challenges that our customers faced throughout the recent months we have successfully brought our working capital accounts back in line by reducing our accounts receivable and accounts payable during the second quarter."
Mr. Gerry Daignault, AgFeed's COO emphasized, "While AgFeed has supported its customers with extended payment terms from time to time, in light of the industry wide operating pressures we limited this practice during the quarter and reduced accounts receivable by over $5.6 million from March 31st. We also reduced our payables by approximately $3.4 million while also continuing our capital investment program to support of expansion in an amount over $3.3 million."
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