HONG KONG, March 23, 2014 (GLOBE NEWSWIRE) -- As the leading chicken meat products supplier in China, DaChan Food (Asia) Limited ("DaChan Food" or the "Company", stock code: 3999) announced its annual results for the year ended 31 December 2013 on 21 March. The feed business became the key growth driver of the Group and achieved a growth in turnover of 4.2%. The growth is mainly attributable to the significant increase in feed business in overseas market, where the turnover increased 10.7% and gross profit jumped 18.3%. Against the background of downturn in the breeding and rearing industry, and with the progress of the de-risking strategy, turnover of the meat product business maintained at similar level to that of the previous year. The Group's overall turnover increased by 2.8% to RMB11.75 billion, comparing with 2012. However, as affected by the weakening economic growth, slackening consumption demand and outbreak of epidemics, the growth of the processed food segment eased to 3.2%.
Despite a rise of 1.4% in the gross profit of the feed business, the overall gross profit margin decreased 4.5% as the gross margin of meat and food products decreased 49% and 6.2% respectively under the influence of rising material cost, fierce competition, decreasing market selling price of meat products and a weak demand for chicken meat. During the period, the Group continued to invest in building new sales channel, developing new departments and business, adjusting remuneration of employees and in food safety and inspection, which contributed to the decrease in gross margin and a slight loss attributable to shareholders of the Company.
In a challenging environment for the industry, DaChan Food maintained a robust financial position. As at 31 December 2013, the Company has net assets of approximately RMB2 billion and its current ratio was 1.80 times (2012: 1.76 times) and debt to equity ratio was 41.3% (2012: 32.2%).
The breeding and rearing industry of China was impacted by the sudden recurrence of H7N9 flu in the first half of 2013. Although its impact has diminished, the domestic food and beverage market was inevitably affected. In particular, the consumption of chicken meat in group meal of organisations and B&F chain stores decreased. Furthermore, the price of chicken meat has remained in the doldrums. Facing such challenge, the Group adhered to its strategy of "de-risking, enhancement of food production and brand building" formulated in 2012. By pursuing strict quality control, the Group expanded the proportion of sales of non-chicken products, increased the meat-to-food product conversion rate, and enhanced its distribution and service capability for the consumer market. All segments of the Group have improved their product mix with increasing added value.
Mr. Han Jia-Hwan, Chairman of the Board of DaChan Food, said, "The Company is effectively implementing the strategy of 'de-risking, enhancement of food production and brand building'. Based on its excellent comprehensive food production traceability platform, the Company constantly enhances production processes and technology R&D so as to increase sales of food products and increase its influence in the consumer market. All these are its proactive efforts in addressing the downturn of the breeding and rearing and food industries and the volatility risks of the industries, and we shall adhere to and refine this direction in the future. The Company is dedicated to providing consumers with safe and delicious food products through various channels, and pursuing long-term cooperation with farmers and business partners for mutual benefit."