Based on preliminary results, Chinese pork processor Zhongpin generated record revenues of approximately $540.0 million for the fiscal year ended December 31, 2008, an increase of approximately 85.3% from $291.4 million in 2007.
The company’s strong revenue growth is attributable to the growing demand for the company’s products, rapid capacity expansion and the addition of new geographic markets in 2008. Revenue was slightly lower than the company’s guidance of $550 million to $570 million due to lower than anticipated sales volume and selling prices during the fourth quarter of 2008, partly resulting from the impact of the global economic downturn on the Chinese economy.
The company expects its 2008 fiscal year gross margin and net margin to be in line with the company’s previous guidance.
The company expects revenues for the fiscal year ending December 31, 2009 to be in the range of $780 million to $810 million. Management expects strong revenue growth in 2009 due to anticipated growth from new markets and additional capacity from the company’s new chilled and frozen pork and prepared meat facilities as they ramp up to target utilisation levels in the first half of 2009. Gross margin for the full year 2009 is expected to be approximately 12.0% with net margin of at least 6.0%.
Due to the adverse impact on China’s meat processing industry caused by the global economic slowdown, and the company’s primary focus on rapidly expanding its market share, management expects margins for fiscal year 2009 to be slightly below the 2008 levels.
“We are pleased with our strong performance in fiscal year 2008, which reflected the growing recognition of our brand and our ability to meet consumer demand for nutritious and high quality pork products. Our record financial performance in 2008 was also driven by the successful execution of our capacity expansion plans, supply chain integration and sales distribution capabilities in new and existing markets,” commented Xianfu Zhu, CEO of Zhongpin.
“During the fourth quarter of 2008, demand for pork products declined as the worldwide economic slowdown began to impact the Chinese economy. Our growth strategy for 2009 is to achieve robust revenue growth by increasing our market share and improving our customer service. We plan to accomplish this by establishing additional regional sales and distribution centers, developing new products, and optimising sales channels.”