Chinese duck breeder announces increases in 2010 profit results

Anhui Taiyang Poultry Co, a vertically integrated duck breeder, processor and distributor in China has announced a 44% year-over-year revenue increase in its financial results for the year ended December 31, 2010.

Other financial highlights for the duck breeder included a 119% rise in gross profit to $9.2 million; gross margin totaled 22%, versus 15% a year ago. Operating profit increased 39% to $3.9 million and net income increased 73% to $4.3 million, versus $2.5 million in 2009.

“2010 was an eventful year for Anhui Poultry as several significant milestones were achieved, while additional growth initiatives were set in motion for 2011 and beyond. Our ability to enact our strategy coupled with the increased industry demand for our duck products and positive pricing trends allowed us to increase revenue 44% to $41.7 million in 2010,” said Wu Qiyou, Chief Executive Officer and Chairman of the Board of Directors

Breeding unit revenue

“Our revenue increase was primarily driven by the increase in our Breeding Unit revenue by 63% to $12.6 million and revenue in our Feed Unit to $13.9 million as compared to approximately $51,000 in 2009. During the third and fourth quarters of 2010, the pricing of ducklings hit a historically high price of over 8 RMB or approximately $1.18 per duckling. As a result we found it more financially beneficial to explore options to sell our ducklings as opposed to raising the ducks to be used for the Food Unit of our business. Thereby revenue in our food business was reduced while increasing the revenue generated through our Breeding Unit. Going forward we will continue to evaluate the industry pricing trends so that we manage our business to maximize our financial results.”

Wu Qiyou continued, “In November 2010 we became a publicly traded company. Through this transaction, we incurred several one-time expenses including stock based compensation of approximately $2.1 million and approximately $894,000 in legal, accounting and professional costs related to going public. Based on these one-time expenses our adjusted net income (non-GAAP) totaled approximately $7.1 million.”

Anhui Poultry raises, processes and markets ducks and duck related food products through three business lines, the Breeding Unit, Feed Unit and Food Unit. During the fiscal 2010 year, Breeding Unit revenue increased 64% to $12.6 million as compared to $7.7 million for the same period the year prior. Feed Unit generated $13.9 million in 2010 compared to approximately $51,000 in 2009. Food Unit revenue decreased 39% to $15.2 million in 2010 as compared to $21.1 million in 2009.

Own ducklings

Breeding Unit sales increased in 2010 primarily as a result of higher demand and market prices for ducklings in China. Because the Company generates its own ducklings from its biological assets, the cost of producing new ducklings does not fluctuate with the market selling price for the ducklings. At current industry pricing, the Company can maximise its profits by selling internally generated ducklings directly into the market, as opposed to using them as inputs for Food Unit products. The market price of packaged Food Unit products does not fluctuate immediately with the market price of the input ducklings.

Anhui Poultry, founded in 1996, raises, processes and markets ducks and ducks related food products through three business lines. Anhui Poultry specializes in the breeding, hatching and cultivation of ducklings for resale and processing by its food processing unit, production of duck feed for internal use and external sales, and processing of commercial ducks into frozen raw food product for commercial resale. Current production unit capacity includes 100,000 tons of feed, 600,000 parent duck seedlings, 30 million commercial duck seedlings, and processing capacity of 15 million ducks. Strategically located in Ningguo City, Anhui Province, China, Anhui Poultry operates in accordance with European, Japanese and Korean standards and is certified as a pollution free agricultural product by the national government.

Source: PR Newswire