Mouldy Corn Hit Tianli's Business in Q4

CHINA - Tianli expects 2011 revenue and net income in the range of US$28.5 to $29.5 million and $8.2 to $8.8 million, respectively. Its fourth-quarter results were impacted by contamination of the feed supply although the company says contaminated feed was quickly mitigated by its monitoring procedures.
calendar icon 20 December 2011
clock icon 4 minute read

Tianli Agritech, Inc., a leading producer of breeder hogs and market hogs based in Wuhan City, China, has provided financial and operational updates.

The company say that, based on sales to 15 December, management expects full year results as follows: revenue, US$28.5 to $29.5 million; net income, $8.2 to $8.8 million and earnings per share (EPS), $0.81 to $0.87.

Revenues include the sales of breeder hogs, meat hogs and sales from the Company's on-going retail operations in cooperation with An-Puluo Foods whereby the Company sells refrigerated pork products to 45 supermarkets in greater Wuhan, including Wal-Mart and other major retailers.

Hanying Li, Chairwoman and CEO of Tianli, commented: "We have seen our sales trend nicely throughout the year. A combination of higher hog prices and an increase in the number of Tianli breeders and market hogs sold have produced impressive year over year growth for our Company.

"Retail sales and profits have added to our revenue and earnings streams as anticipated and we expect this segment of our business to grow meaningfully in 2012 as we introduce our Black Hog meat into our sales channels. We are excited at our growth prospects in 2012 and producing continued returns to shareholders," she said.

Tianli expects to report its fourth quarter and full year 2011 results in March 2012. The Company will provide additional details regarding its operations and financial outlook in coordination with the Company's earnings release and conference call.

Business update

In late November, the Company and a number of other farms in greater Wuhan received a shipment of tainted corn feed containing a mycotoxin mould. A number of hogs that consumed this feed were infected with the mould, which caused porcine diarrhoea. Approximately 10,000 of Tianli's hogs, consisting of a mix of sows, feeder pigs and piglets, with the majority being piglets, exhibited signs of the infection. A number of the infected hogs were disposed of while others were treated and are recovering. All of the infected hogs have been removed from the general population of hogs and currently, there are no other hogs exhibiting similar symptoms. The Company continues monitoring and tracking the health of its hogs on a daily basis.

This was Tianli's first purchase of corn sourced from the centre of China and upon discovering the mould, the Company took immediate action to isolate and contain the impact. Historically, Tianli has relied upon corn from Northeast China for its corn feed and it will strictly enforce this policy for the foreseeable future.

Ms Li said: "We have taken all the steps necessary to eliminate the threat posed by this shipment of tainted corn. Our managers and staff are always on guard against infected feedstocks and other contaminants and we regularly inspect all shipments and take all necessary precautions to avoid damage from infected supplies.

"While we employ the highest health standards across our entire operations, it is impossible to prevent all contaminations. Because we constantly monitor the health of our animals we were able to quickly contain the effects of this incident. The additional costs and lost revenues from the infected hogs will have a short-term impact on our operations and our financials. However, we will quickly replace the lost hogs and return to full production levels," concluded Ms Li.

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