Zhongpin, a meat and food processing company in the People's Republic of China has reported higher revenues, net income, and diluted earnings per share for the third quarter of 2009.
Zhongpin also reduced its guidance for the full year 2009 because, even though Zhongpin's sales volume in the third quarter 2009 achieved a record high, pork prices in China are currently not increasing.
Mr. Xianfu Zhu, Chairman and Chief Executive Officer of Zhongpin Inc., said, "Our operating and financial performance in the third quarter was encouraging, with higher tonnage on somewhat lower average prices compared with the third quarter of 2008.
"Prices for hog and pork products began to increase in June, continued at higher levels in July and early August, then stabilised at those somewhat higher prices during the second half of the third quarter.
"In the early part of the fourth quarter this year, we have seen only modest changes in hog and pork prices. Because we now believe that pork price increases in the fourth quarter are likely to be less than our previous expectations, we have prudently reduced our guidance for the full year 2009."
Pricing and tonnage
Based on Zhongpin's results, average hog and pork prices per metric ton increased sequentially about 14.8 percent in the third quarter from the second quarter of 2009, primarily due to China's purchases for its national pork reserves, which helped to bring the price of hogs above the breakeven point for farmers. The government's purchasing policy is based on the relationship of the price of hogs to the price of corn, which is the principal hog feed. The government authorized certain qualified enterprises, including Zhongpin, to acquire hogs and to slaughter, process and stock them as frozen pork.
Market and capacity expansions continue
Mr. Zhu continued, "This year and next we are continuing to implement our strategic plan to sustain the growth we have experienced in the last five years.
"Through 2010, we expect to expand our distribution channels and develop new markets. Through our aggressive marketing campaign, we also expect to increase our brand awareness, customer loyalty, and sales. We are further streamlining our supply chain to create a unified, safe and efficient cold- chain logistics system."
• Zhongpin Foods