Tianli Agritech Reports Increased Market Hog Sales

by 5m Editor
15 March 2012, at 8:13am

CHINA - Tianli Agritech yesterday announced that the company's revenue increased 49 per cent year-over-year to $8.7 million due to higher selling prices, increased unit sales of Tianli market hogs plus retail sales of "Tianli AnPuluo" hog meat.

Tianli's Chairwoman and CEO, Hanying Li, said, "We completed another successful year, which included the acquisition of our 11th hog farm and the launch of our Tianli-branded retail pork products through our partnership with An Puluo Foods. While our fourth quarter results were negatively impacted by complications resulting from contaminated feed at a few of our farms, we responded quickly to contain the impact. Having implemented a series of additional safeguards, we expect the negative drag on our financials to subside in the first half of 2012."

Revenue for the fourth quarter of 2011 increased 49 per cent to $8.7 million from same period a year ago. The Company sold 25,472 hogs, down 1 per cent from the prior year reflecting the stronger demand for market hogs offset by the weaker demand for breeder hogs. Sales of market hogs increased 68 per cent to $5.3 million as high retail pork prices drove strong demand for market hogs. Breeder hog sales fell 38 per cent to $1.6 million, representing 19 per cent of total sales in the fourth quarter of 2011.

Through its cooperation with An Puluo Food, Tianli's retail division generated $1.7 million in sales in the fourth quarter after launching in the third quarter of 2011. Tianli provides and co-brands hog meat cuts, packaged and sold in refrigerated food cases under the Tianli AnPuluo brand in over 50 major retail outlets in great Wuhan, including Wal-Mart, Zon 100 and RT Mart.

Gross profit in the fourth quarter of 2011 was $2.0 million, a 20 per cent decrease from the same period last year. Gross margin was approximately 23 per cent and 43 per cent for the fourth quarter of 2011 and 2010, respectively. The year-over-year margin decline was attributable to $1.3 million in costs related to the disposal of a shipment of contaminated hog feed and the treatment and disposal of hogs which became ill as a result of eating the contaminated feed.

Selling, general and administrative expenses were $0.9 million in the fourth quarter of 2011, an increase of approximately $0.5 million. Approximately $0.1 million of the increase was related to higher public company expenses and $0.4 million related to the Company's retail business and marketing costs not present in the year ago period.

Net income attributable to Tianli common stockholders was approximately $0.8 million, down 61 per cent from $2.2 million in the three months ended December 31, 2010. Earnings per fully diluted share were $0.09 compared to $0.12 the previous year.