AgFeed Starts to Look Beyond China and US

US & CHINA - AgFeed Industries, Inc. has told its shareholders it expects revenues of approximately $84.0 million and a net loss of approximately $17 million for the second quarter.
calendar icon 4 August 2011
clock icon 3 minute read

AgFeed Industries, Inc., an international agribusiness with operations in the US and China, announced its preliminary results for the second quarter of 2011 at its annual shareholders' meeting earlier this week.

Today, 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.

The company says its strategy is to establish a global and vertically integrated controlled production system. It 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. Its global production system will be structured to assure clients and business partners a reliable supply of competitively priced pork. AgFeed expects to initially supply pork from its established production base in the United States and its burgeoning production base in China. Longer term, it will consider establishing production bases or sources of supply in other low-cost pork production centres. The company 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 30 June 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, AgFeed 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's leadership remains committed to pursuing every available remedy to collect all amounts due.

AgFeed 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 rationalize 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.

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