AgFeed Industries: Preliminary results for Q2
AgFeed Industries, Inc., an international agribusiness with operations in the U.S. and China, at its annual shareholders’ meeting announced its preliminary results for the second quarter of 2011.
AgFeed is on the verge of completing its transition from a company whose sole focus was China to one which has the majority of its operations in the United States and views its business operations and opportunities on a global basis.
It said in a press release: “Our strategy is to establish a global and vertically integrated controlled production system. We will efficiently breed and raise hogs to market weight and deliver live animals or specified harvested parts to production/consumer marketing partners in core markets. Our global production system will be structured to assure our clients and business partners a reliable supply of competitively priced pork. We expect to initially supply pork from our established production base in the United States and our burgeoning production base in China. Longer term, we will consider establishing production bases or sources of supply in other low cost pork production centers. We will be driven by food safety, operating efficiency, sustainability and environmental stewardship.
For the second quarter of 2011, the company expects to report revenues of approximately $84.0 million and a net loss of approximately $17 million for the three months ended June 30, 2011. This loss includes an expense of $9.2 million related to the collection of outstanding accounts receivable in the Company’s Chinese animal nutrition business and an additional $5.0 million of bad debt allowance to increase its bad debt provision from $1.9 million to $7.0 million. Accordingly, it expects accounts receivable to decrease by approximately $14.2 million. The operating pressures facing the company’s customers has led management and the board to be aggressive in establishing reserves due to concerns regarding credit quality.
The company also announced that it will withdraw the registration statement filed on Form F-1 relating to the spin-off of its animal nutrition business due to market conditions.
In its ongoing effort to rationalise its capital structure, the company also noted that it had exchanged a majority of the warrants issued in May 2009 for shares of common stock. This exchange reduced the number of fully diluted shares outstanding by 349,447.