Anhui Taiyang Poultry, a vertically integrated duck breeder, processor and distributor in China, has announced the financial results for the three and nine months ended September 30, 2011.
Wu Qiyou, Chief Executive Officer and Chairman of the Board of Directors, stated, "We are pleased with our financial results for the first nine months of 2011 as they have provided a positive trend related to our gross margin improvement.
“During the nine month period, we experienced a 57.3% increase in revenue of our higher margin Breeding Unit to $12.2 million from $7.7 million in the comparable period in 2010. This portion of our business accounted for 52.4% of total revenue during the 2011 period as compared to 25.1% in 2010. Thus far in 2011, the average price for ducklings in China has improved to $0.86 as compared to $0.60 over the same period in 2010.
“We foresee market pricing to stabilise in the near term and remain at a financially beneficial level for us to continue operating as we have for the past few quarters of streamlining higher revenue from our Breeding Unit. Our third quarter and year to date results in 2011 include non-cash bad debt reserve charges of $1.2 million charged against certain accounts receivable, loans receivable, supplier prepayments, and sale price receivable from the 2010 sale of our fertilizer plant, which contributed to last year's revenue and net income results. We are pleased to report that we have increased our shareholder's equity from $2.52 per share to $2.70 per share, despite the material reserves taken in the third quarter of 2011."
Breeding Unit sales increased during the 2011 nine month period primarily as a result of higher demand and market prices for ducklings in China. During the 2011 nine month period ducklings had an average price of $0.86 as compared to $0.60 for the same period in 2010. Average sales price for grown commercial processing ducks was approximately $1.15 per kilogram during the 2011 nine month period as compared to $0.94 per kilogram for the same period in 2010. As a result of the increased revenue from the higher margin Breeding Unit during the 2011 nine month period, consolidated revenue decreased, but gross profit increased $339,000, or 5.5%.
Food Unit revenue was down for the first nine months of 2011 as compared to the first nine months of 2010 as a result of higher market prices for ducklings, which resulted in ducklings being sold to the market rather than being used internally for Food Unit products. When market prices of ducks are high, on a consolidated basis, the Company can make higher profits by selling ducks into the market rather than processing them into food products, which have a more stable market price, and thus will yield lower margins when the input costs increase.
Anhui Poultry, founded in 1996, raises, processes and markets ducks and duck related food products through three business lines. Anhui Poultry specialises 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 Ninnguo 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: Anhui Taiyang Poultry