Tianli Agritech, Inc., a leading producer of breeder and market hogs headquartered in Wuhan City, China, announced its financial results for the quarter and nine month period ended September 30, 2011.
ThirdQuarter Highlights :
Revenue increased 65% year-over-year to $9.2 million due to higher selling prices and unit sales of breeder hogs and market hogs
Market hog sales increased 88%, driven by a 58% increase in average price per hog
Retail sales contributed $1.1 million of revenues in initial quarter of operations
Cash flows from operations were $5.6 million for the first nine months of 2011
Tianli’s chairwoman and CEO, Ms. Hanying Li, stated, “Our strong third quarter results were driven by robust underlying demand for pork in China. Despite a shift toward market hogs this quarter, our sales and margins benefited from higher pricing. As we ramp capacity at our 10th farm, we expect continued growth in units and pricing for the remainder of 2011 and added revenue contributions from our AnPuluo Foods retail program.”
Sales by Products
Revenue for the third quarter of 2011 increased $3.7 million, or 65%, to $9.2 million from the prior year. The company sold a total of 25,519 hogs, up slightly from 25,420 hogs sold in the comparable period in 2010. Sales of breeder hogs fell 2% to $2.5 million as hog farmers delayed breeder hog purchases to capitalize on the increasing price of pork in China which, according to the National Bureau of Statistics, had increased 43.5% in September 2011 while the average price per breeder hog increased only 35% to $348 per hog.
As a result, market hog sales surged 88% to $5.6 million. The number of market hogs sold increased by 2,907 head to 18,350 head while the average price per hog increased a record 58% year-over-year to $305 due to high market demand.
Through their cooperation with An Puluo Food, Tianli’s retail segment generated $1.1 million in sales after its initial launch in the third quarter of 2011. Tianli provides and co-brands hog meat cuts, packaged and sold in refrigerated food cases in over 30 major retailers in greater Wuhan.
Gross profit in the third quarter of 2011 was $3.9 million, up 58% over the same period last year. Gross margin was approximately 42% and 44% for the third quarter of 2011 and 2010, respectively. The slight decrease in margin was due to higher feed costs and the revenue and gross profit contribution from its lower margin retail business, which commenced operations in the third quarter of 2011.
Net income for the three months ended September 30, 2011 was approximately $2.9 million, up 33% from $2.2 million last year. Earnings per fully diluted share were $0.29 compared to $0.23 the previous year. Share counts were 10.1 million and 9.7 million in the third quarter of 2011 and 2011, respectively.
First nine months2011 results
Net sales increased 47% to $22.7 million during the nine months ended September 30, 2011. Tianli sold 76,128 hogs at an average sales price of $285 per hog, an increase of 5% and 34%,
respectively. Breeder hog sales increased 24% to $7.7 million, accounting for 34% of total sales in the first nine months of 2011. Market hog sales were $13.9 million, up 50% from $9.3 million in the first nine months of 2010.
Gross profit increased $2.8 million to $9.5 million. Gross margin percentages were 42% and 43% for the first nine months of 2011 and 2010, respectively.
Net income and earnings per share was $7.3 million and $0.72 in the nine months ended September 30, 2011 and 2010, respectively, compared to $6.0 million and $0.69 in the previous nine month periods.