Zhongpin 2Q net income falls, sales rise

by Editor fleischwirtschaft.com
Wednesday, August 15, 2012

Zhongpin Inc. reports for 2Q 2012 vs. the second quarter 2011, net income decreased 43% to $11.0 mill. from $19.3 mill., primarily due to a lower gross profit margin, the cost of more employees to support expansion, higher salaries, rising labor and utility costs and higher interest expenses and income taxes.

Total sales revenues increased 11.4% to $408.2 mill. from $366.5 mill. in 2Q 201, due to higher sales volume for pork products sold at lower average selling prices.

Zhongpin plans to invest $58.5 mill. to build a new production, research and development and training complex in Changge, Henan province. Once built, this facility should have an annual production capacity of about 100,000 t for prepared pork products. It also plans to develop a center for research and development, training and quality assurance and control adjacent to this new facility.

The company is also investing approximately $18 mill. in a cold-chain logistics distribution center in Anyang, Henan province, which will have processing capacity, a temperature adjustable warehouse with a floor area of approximately 27,000 m2; a distribution center; and a quality-control center.

Plans for the future

Plans are also in the works to invest $87.5 mill. in a chilled and frozen food processing and distribution center in Kunshan, Jiangsu province near Shanghai. The center will be built in three phases. The first phase will include a processing center, cold-chain logistics center, and business complex. Zhongpin expects to invest about $35.0 mill. on the first phase that should be put into operation in the fourth quarter of 2012.

Approximately $10.5 mill. will be invested in a by-product processing plant in Changge, Henan province that will have a production capacity for 100 mill. meters of casings and 300 bill. units of raw material to make heparin sodium. The construction started in March 2012, and the new facility is expected to begin operations in the fourth quarter of 2012.

Zhongpin also plans to invest approximately $49 mill. to build a slaughtering and processing plant, low-temperature prepared pork plant and logistics center in Tangshan, Hebei province. This facility will have an annual production capacity of about 60,000 t for chilled pork, 20,000 t for frozen pork, and 22,000 t for prepared pork products.

Construction is scheduled to start in the third quarter of 2012, and the new facility for chilled and frozen pork is expected to begin operations in the second quarter of 2013.

Zhongpin Inc. is a leading meat and food processing company specialising in pork and pork products, vegetables and fruits in China. Its export markets include Europe, Hong Kong and other countries in Asia.