China's CPP announces 1,450% annual profit growth
C.P. Pokphand Co. Ltd, the leading animal and aquafeed producer in China, reported group profit for the year ended December 31, 2010 of US$132.8 million. This compares with US$8.6 million in 2001 - a year-on-year increase 1,450%. Total turnover reached US$1,950 million, 94.3% of which was attributable to the feed business while the Chlortetracycline (“CTC”) business accounted for 5.7%. Overall gross profit margin increased to 15.9%. The Board recommended a final dividend of HK$1.6 cents per share for the year (2009: HK$0.5 cent).
Since completing the acquisition of a feed business in China from the parent company in late February 2010, the Group has strengthened its competitive edge in the feed business and has achieved significant improvement to its operational results. Feed revenue for the ten months to December 31, 2010 rose to approximately US$1,840 million on sales of 3.76 million tons of animal feed products. By product categories, complete and concentrate feed accounted for 91.7% of total turnover of all feed products while swine, poultry, aqua and other animal species contributed 38.7%,38.2%,10.9% and 3.9% respectively, while premix feed accounted for 5.6%. The Group also reached a feed mill leasing agreement with the parent company in October to further enhance production capacity.
Looking ahead, a growing demand in China and throughout the region for quality food products, coupled with increasing awareness of food safety, will continue to fuel the demand for quality and safe feed products to the benefit of the group. CPP has signed an agreement on the leasing of four feed plants from its parent with an aim of enhancing production capacity. The Group will optimize plant production by assigning specific production lines to produce specialized high value nutrition products. Furthermore, the group will increase investment in R&D while continuing to monitor raw material price trends through centralized procurement to strengthen and improve overall efficiency.
In addition to developing the Chinese market, the group’s management will also focus on investment opportunities overseas in order to further advance the long-term interests of its shareholders. In January 2011, CPP and its parent company entered into an Option Agreement, pursuant to which the Group was granted an option to acquire from the parent a majority stake in an integrated livestock and aquaculture company in Vietnam. The Group has taken the long-term interests of its shareholders into consideration and is in the process of evaluating this opportunity which may enable the Group to further diversify income and enhance profitability.
