China Yurun Food Group Limited Announces its Interim Results for
the Six Months Ended 30 June 2010
2010-08-24 19:21
Solid Business Growth Driven by Forward Looking Capacity
Planning
Consolidate Industry Leadership Through Sustained Market Share
Enhancement
HONG KONG, Aug. 24 /PRNewswire-Asia/
--
Financial Highlights
For the six months ended 30
June
(HK$ in million)
2010 2009
Change (%)
Turnover
8,693 5,834
+49.0%
Gross profit
1,345
976
(Gross profit margin)
(15.5%) (16.7%)
+37.8%
Profit attributable to
shareholders
1,309
841
(Net profit margin)
(15.1%)
(14.4%) +55.7%
Diluted earnings per share
HK$0.743 HK$0.545
+36.3%
Proposed interim dividend
per share
HK$0.20
HK$0.15 +33.3%
China Yurun Food Group Limited ("Yurun Food"
or the "Company", and together with its subsidiaries, the "Group";
HKEx: 1068), a leading vertically-integrated meat-product processor
and supplier in China, announced today its interim results for the
six months ended 30 June 2010 (the "Period").
During the Period, the Group recorded
HK$8,693 million (1H2009: HK$5,834 million) in turnover,
representing a 49% increase over the same period last year. The
increase in turnover was mainly attributable to the Group's
anticipated production capacity expansion plans and brand building
over the past years, as well as the prosperity of the Chinese
consumer market during the Period, which further accelerated demand
for branded quality meat products. As a result, the Group's overall
business recorded robust growth.
The Group's gross profit and net profit
reached HK$1,345 million (1H2009: HK$976 million) and HK$1,309
million (1H2009: HK$841 million) respectively during the Period,
representing an increase of 37.8% and 55.7% respectively. The
Group's gross profit margin decreased 1.2 percentage points to
15.5%, as compared to 16.7% in the same period last year, and net
profit margin increased 0.7 percentage point to 15.1% as compared
to 14.4% in the same period last year. The slight decrease in gross
margin was mainly attributable to the increase in the proportion of
sales from the upstream segment, which has a relatively lower
profit margin.
The board of directors of the Company has
resolved to declare an interim dividend of HK$0.20 per share for
the Period (1H2009: HK$0.15).
Mr. Zhu Yicai, Chairman of Yurun Food, said,
"In the first half of 2010, domestic consumption in China continued
to be promising, which provided great momentum to the development
of the Chinese meat product market. In addition, with our
nationwide capacity expansion and market strategy in recent years,
the Group maintained a sustainable business growth. Moreover, to
ensure the systematic development of the hog slaughtering industry
in China, the Central Government has gradually implemented a series
of favourable policies, with a purpose of consolidating the
industry by eliminating outdated hog slaughtering capacity which
are below safety and hygiene standards in the coming five years,
leading to a systematic increase in sales proportion of chilled and
small packaged pork products in the market. Given the rising
awareness of the Central Government and consumers to food safety,
the regulatory and operational environment is favourable to the
sustainable development of Yurun Food. Opportunities arising from
industry consolidation continued to further promote the Group's
sales and profitability of upstream branded chilled pork and
downstream low temperature meat products ("LTMP"). Looking forward,
the Group will continue to realize its strategic production
capacity expansion plans, actively expand its distribution
channels, and capture the tremendous business opportunities brought
about by industry consolidation in order to continuously enhance
the Group's market share and shareholders' returns."
Business Review
The Group's business is divided into
downstream processed meat products and upstream chilled and frozen
meat segments.
For the six months ended 30 June
(HK$ in million)
Proportion to
Turnover Change Total
Turnover
2010
2009 % 2010
2009
Upstream Chilled and
Frozen Meat, inter
alia:
- Chilled Pork
5,930 3,926 +51.1%
78.9% 82.0%
- Frozen Pork
1,590 863
+84.2% 21.1% 18.0%
- Segment Total
7,520 4,789 +57.0%
100% 100%
Downstream Processed
Meat Products,
inter alia:
- LTMP
1,747 1,536
+13.7% 93.8% 94.5%
- HTMP*
116
90 +28.0% 6.2%
5.5%
- Segment Total
1,863 1,626 +14.5%
100% 100%
Inter-segment
Elimination
(690) (581)
-- --
--
Total Revenue
8,693 5,834 +49.0%
-- --
*HTMP is defined as high temperature meat
products.
For the six months ended 30
June
Gross Margin
Change
2010 2009
Percentage Points
Upstream Chilled
and Frozen Meat,
inter alia:
- Chilled Pork
11.7%
11.9% -0.2
ppt
- Frozen Pork
6.6%
6.5% +0.1
ppt
- Overall
10.6%
10.9%
-0.3 ppt
Downstream Processed Meat
Products, inter alia:
- LTMP
29.9%
28.4%
+1.5 ppt
- HTMP
21.0%
20.5%
+0.5 ppt
- Overall
29.4%
28.0%
+1.4 ppt
Production Capacity
As at 30 June 2010, slaughtering capacity of
the Group was 28.55 million heads per year, representing an
increase of 3 million heads as compared to 25.55 million heads at
the end of 2009, while the Group's annual capacity of downstream
meat processing was 283,000 tons, representing an increase of 5,000
tons as compared to that at the end of 2009. The Group will
continue to systematically expand in the coming years, with focus
on increasing market coverage, reducing bottlenecks and upgrading
key production facilities.
Product Quality and R&D
Strict internal quality control procedures of
international standards have been applied to processes ranging from
procurement, production, and sales to logistics. Meanwhile, the
Group continued to expand its R&D team and strengthen its
research efforts, focusing on mid-to-high-end products and new
competitive products, as well as to lead the trends of meat product
consumption in order to gain competitive advantages.
Consolidation Opportunities Under New
Industry Policy
With the stable and continuous rapid growth
of the Chinese economy and broadening urbanization in China, the
middle class are increasingly purchasing meat products from modern
supermarkets as compared to traditional wet markets to ensure
quality. Meanwhile, demand for mid-to-high-end branded meat
products has been increasing correspondingly. The Group believes
that, against the backdrop of abundant hog supply, the growing
demand for meat products will continue to support the steady
expansion of its overall business.
Furthermore, to ensure the systematic
development of the hog slaughtering industry in China, the Central
Government has gradually implemented a series of favorable
regulations, such as the "Administrative Provision for Live Pig
Slaughtering", the "Food Safety Law" and the "Guideline For
National Hog Slaughtering Industry Development (2010-2015)" (the
"Guideline"). The Guideline, which was published in late 2009, aims
to expand the scale of industry consolidation in the coming five
years, leading to a systematic increase in the sales proportion of
chilled and small packaged pork products in the market.
Specifically, 30% of the outdated manual and semi-automated
slaughtering plants will be eliminated by 2013 and further to 50%
by 2015. Among them, about 80% of slaughtering plants in major
cities and developed regions which are below hygienic standards
will be eliminated. The mix of pork products will be further
improved through expanding the scale of industry consolidation,
which will change the current market position that supply of fresh
meat surpasses that of chilled meat, gradually leading to
increasing demand from consumers for modern meat products. The
Guideline will be propitious for the future development of chilled
meat and LTMP, the two core businesses of the Group, driving
further development of Yurun Food.
Benefiting from the favourable market and
regulatory environment, supported by a dynamic management team with
proven track record, the Group aims to fully leverage the
opportunity arising from the industry consolidation and further
strengthen our advantages in brand recognition, nationwide
production and marketing network.
About China Yurun Food Group Limited (HKEx
Stock Code: 1068)
Leveraging on its vertically-integrated
business model and strategically located production plants, Yurun
Food is the leading meat-processor and meat products supplier in
China. With its well-established food brands, state-of-the-art
production facilities and diversified distribution channels, Yurun
Food has achieved a solid track record with robust growth for five
consecutive years. Furthermore, with the support of our products'
high hygienic and safety standards and stringent internal quality
control procedures, Yurun Food will aim to continue to expand its
market share and further strengthen its leading market position as
a result of the implementation of industry consolidation and food
safety laws by the Chinese Government. Yurun Food was included in
the MSCI Global Standard Index (MSCI China Index) on 29 August
2008, which is an important recognition of Yurun Food as one of the
leading companies in the meat processing industry by the investment
community.
Company website: http://www.yurun.com.hk
For further information, please contact:
China Yurun Food Group Limited
Fax: +852-3927-3300
Email: [email protected]
Elite Investor Relations Limited
Investor Relations:
Ms Cindy Xin
Tel: +852-3183-0226
Fax: +852-2155-9165
Email: [email protected]
Media Relations:
Mr Bunny Lee
Tel: +852-3183-0282
Fax: +852-2155-9165
Email: [email protected]
SOURCE China Yurun Food Group Limited