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Good Progress Reported in AgFeed's Quarterly Report

by 5m Editor
12 May 2011, at 6:52am

US & CHINA - For the first quarter of 2011, AgFeed Industries has reported revenue of US$93 million and an operating profit of $0.5 million.

AgFeed Industries, Inc., an international agribusiness with operations in the US and China announced its results for the first quarter of 2011.

AgFeed reports revenue of US$93 million and an operating profit of $0.5 million. Revenues for the company's US hog production unit reached $57.9 million with an operating profit of $3.6 million. In China, significant progress was made in restructuring hog production and containing operating issues in this business segment with revenue reported at $10.9 million and an operating loss of $139,000. In its China-based animal nutrition segment, the Company reports first quarter revenue of $24.2 million and an operating loss of $835,000. These results do not reflect the loss attributable to discontinued operations within the Company's legacy Chinese hog production unit.

John A. Stadler, AgFeed's Chairman & Interim Chief Executive Officer stated: "Our team of hog production professionals that were deployed in the past months to focus on turning around our legacy Chinese hog production system has made significant strides in closing and liquidating facilities that could not meet our standard production metrics while at the same time moving rapidly to bring appropriate operating discipline to the remaining legacy assets. This work is not yet complete. However, we expect that we can return the legacy system to profitability later this year. The performance of our animal nutrition unit was disappointing. The size of the nation-wide Chinese hog herd is down which has impacted demand for our nutrition products. More importantly we were unable to pass along the rapidly increasing cost of grains in real time."

Gerard Daignault, President & Chief Executive Officer of AgFeed's animal nutrition business added: "As our business continues to evolve from its historic base of being focused on premix to having a significant complete feed business, we will face ever greater exposure to swings in the price of corn and soybean meal. Our ability to pass these price increases on to our customers on a timely basis will be vital. Faced with record high commodity prices, we will be confronted with price competition as growers seek alternative feed sources in order to lower their own operating costs. We are committed to providing our customers with quality animal feeds to promote healthy animals and a safe food supply. As part of this commitment and in order to bring a more diverse product line to our distributor base of over 1,887 outlets, we are continuing our R&D efforts to bring our customers specialized products designed for sow development and nursery pig growth."

Edward Pazdro, the Company's Chief Financial Officer commented: "During the first quarter, we continued to rationalise our Chinese hog production and headquarters operations which allowed us to reduce our head-count by 203 since the end of 2010. We also retired approximately $4.5 million of local bank debt in China in May 2011."

Regarding the Company's US-based hog production business its leader, Glenn McClelland stated: "We continue to be extremely pleased by the commitment to operating excellence and continuous operating improvement demonstrated by our team. Our results for the quarter clearly demonstrate this commitment and the dedication of our entire organisation."

In conclusion, Mr Stadler added: "During the coming weeks we plan to provide 'guidance' to the investment community regarding our annual performance.

"The base of hog production excellence and human capital which AgFeed can deliver from its US operations at M2P2 coupled with our burgeoning Chinese presence and its showcase western-style hog production facility at Da Hua demonstrate a model of aligning resources from disparate global locations in order to delivery high quality, safe food to a global market."

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