HONG KONG, Aug. 9, 2013 (GLOBE NEWSWIRE) -- As the leading supplier of chicken meat products in China, DaChan Food (Asia) Ltd ("DaChan Food" or the "Company," stock code: 3999) announced its results for the six months ended 30 June 2013 on 9 August. The processed food segment remained the focus of active growth and development with an 11.4% increase in turnover; the feed segment recorded a slight increase in turnover of 2.6% over last year; and turnover of the meat segment decreased by 7.7%. Despite the impact of the "fast-grown chicken incident," the H7N9 epidemic and the sluggish pork prices in the first half of the year, the overall turnover of the Company remained generally the same at RMB 5.43billion, a slight decrease of 0.9% over the same period in 2012.
The overall gross profit of the Company decreased by 10.2%, mainly due to a decline in gross profit of the feed segment and reduction in the demand for consumer food caused by the H7N9 epidemic. During the period, additional costs were incurred as the Company strengthened its channel establishment, marketing and brand promotion as well as investment on product research and development and quality control, while the operation of the new factory has yet to start generating stable profits. Under the combined impact of the above factors, profit attributable to equity shareholders of the Company recorded a more significant decline over the same period last year.
During the period, although the H7N9 epidemic substantially hampered the market demand for chicken meat since April, the meat segment of the Company still achieved a remarkable growth in gross profits with the support from the recovery in meat prices in the first quarter. On the other hand, given the high raw material prices and increasingly fierce competition in traditionally important sales regions, the feed segment recorded a decrease of 14.9% in gross profit. The gross profit of the processed food segment decreased by 8.9% due to the direct impact of the epidemic on end customers' consumption of chicken meat and related products, while the export business of the segment achieved a 10.6% growth in gross profit as both the price and sales volume remained stable.
Meanwhile, DaChan Food maintained a sound financial position as always. As of 30 June, the Company had net assets of approximately RMB2 billion, with its current ratio and debt to equity ratio at 2.19x (corresponding period last year: 1.76x) and 46.8% (corresponding period last year: 32.2%) respectively.
Although the impact of the H7N9 epidemic on the breeding industry in the second quarter in China is gradually subsiding, the domestic catering market still could not be freed from its influence, notably resulting in the shrinking consumption of chicken meat products in group meals and chain restaurants. In response, the Company's food segment actively developed non-chicken products with stringent quality control to disperse risks, and enhanced operational efficiency through optimizing its processing technology, production costs, stocks and logistics management as well as distributor management. Under the strategic guidance of "Risk Elimination and Productivity Enhancement," the meat segment of the Company improved the breeding technology, optimized the pricing mechanism of merchandising contracts and effectively increased the proportion of highly value-added products.
Mr. Han Jia-Hwan, Chairman of DaChan, said, "By adhering to the brand and food strategy, the Company consistently improved the quality of its products, strengthened its marketing teams and refined the marketing work to proactively enhance the sales performance and branding effect of our feeds and processed foods in the end market, thereby securing the Company's leading position in the industry.Meanwhile, the Group also coordinated actively with the government in the development of platform connectivity technology for the establishment of food traceability platform. When the economy is stable and the breeding market starts to recover in the future, the Company will enhance the share and influence of its products in the end market through continuous strengthening of production control and productivity optimization."