China Yurun Food Group Limited ("Yurun Food" or "the Company", and together with its subsidiaries, the "Group")(HKEx: 1068), a leading vertically-integrated meat-product processor and supplier in China, announced its annual results for the year ended 31 December 2009.
During the Year, the Group recorded a turnover of HK$13,870 million (2008: HK$13,024 million), representing a 6.5% growth over the same period last year. In spite of over 20% decrease in hog prices during the Year, the Group was able to significantly increase the sales volume of its products by leveraging on the competitive edge of its "Yurun" brand, as well as its optimized nation- wide production network, therefore boosted the stable growth of its business.
Growth in profit
During the Year, the Group's gross profit and net profit were HK$2,161 million (2008: HK$1,690 million) and HK$1,745 million (2008: HK$1,138 million) respectively, representing a considerable growth of 27.9% and 53.4% respectively as compared to that of 2008. The Group's gross profit margin and net profit margin increased to 15.6% (2008: 13.0%) and 12.6% (2008: 8.7%) respectively. The increases were mainly attributable to the Group's flexible strategies and strong market position. Under the highly volatile market conditions, by proactively adjusting the strategies of its two main business segments, as well as successful production planning, the Group was able to take advantage of its strong "Yurun" brand and pricing power to drive the growth of its overall gross margin. At the same time, the Group further realized economies of scale by enlarging its market share, and thus achieving further improvement in gross margins of its upstream and downstream businesses.
The Board of Directors of the Company recommended a final dividend of HK$0.15 per share for the Year (2008: HK$0.08). This final dividend together with the interim dividend of HK$0.15 per share (2008: HK$0.11), will make a total dividend of HK$0.30 (2008: HK$0.19) per share for the year ended 31 December 2009.
Remarkable results obtained
Mr. Zhu Yicai, Chairman of Yurun Food said, "Amid the challenging market conditions in 2009, the Group achieved remarkable results due to the experienced management team's thorough understanding of the hog breeding cycles and the meat products market. The Group managed to overcome the challenge of fluctuating hog prices by adopting flexible strategies for its chilled meat and low temperature meat products ("LTMP") businesses, as well as utilizing its optimized nation-wide production network.
Following the promulgation of guidelines by the Chinese Government to restructure China's hog slaughtering industry in late 2009, which aims to accelerate industry consolidation and systematically increase the sales of chilled meat and small packaged pork products, the Group will be well positioned to further increase its market share, which will drive long-term business development and continue to enhance the "Yurun" brand. Looking forward, by leveraging on its established business model and sophisticated management team, the Group will continue to implement its long-term development strategies and further enhance its brand recognition and production network in order to achieve economies of scale, increase market share, and drive business growth to maximize value for our shareholders."
Sales and Distribution
As the Group's high value-added and high-end products with relatively higher gross margins, LTMP and chilled meat continued to play an important role in contributing to the Group's overall sales and profits.Furthermore, benefited from Yurun Food's strong brand and pricing power, the Group was able to sustain stable product prices and competitive advantages, leading to improved overall gross margin.