HONG KONG, April 26, 2013 (GLOBE NEWSWIRE) -- As a leading supplier of chicken products in China, DaChan Food (Asia) Limited ("DaChan Food" or the "Company", stock code: 3999) released its results for the three months ended 31 March 2013 on 26 April. The processed foods segment still has the most radiant performance with turnover increasing by 19.3%. Affected by the "fast-grown chicken incident" and the downturn of the pork industry, performance of the meat segment and the feed segment remained at the same level of the previous year, while total turnover increased by 1.4% to RMB 2,720 million, and the gross profit decreased by 5.1%, mainly due to a squeeze in gross profit of feeds. Meanwhile, as the food production and brand building operation strategy needed to be adjusted and due to the increasing concern about food safety, the Group strengthened the establishment of distribution channels, marketing and branding promotion. With increased investment in research and development of new products and the commencement of operation of new factories, overall administration expense of the Group increased. Since the labour cost in China has kept rising, the Group recorded a larger increase in labor cost over the same period of last year. Under the aggregated effects of the above factors, profit attributable to equity shareholders of the Company dropped significantly over the same period of last year.
During the period under review, although the performance of the breeding and rearing industry remained in its trough, the recovery of chicken price as compared to the same period of last year brought a significant growth of 86.2% in gross profit of the meat segment. The gross profit of the feed segment decreased by 22.6% as product prices did not keep up with rising material prices and market competition was fierce. Processed food continued to maintain steady growth with increase in both price and sales volume, recording substantial growth in sales volume through each distribution channel with a 10.3% increase in gross profit. In addition, the gearing ratio of DaChan Food remained healthy. As of 31 March, DaChan Food had net assets of approximately RMB2,004 million while the current ratio and the debt to equity ratio were 2.08X and 36% respectively.
Since the outbreak of the H7N9 was firstly reported on 1 April in China, thanks to the proper measures taken by the government and transparent information disclosure, end consumers have not panicked, although chicken consumption has been affected to a great extent in the short term. Nevertheless, we have a popular brand name and numerous operation bases extend from Northeast China to Eastern China, our products can be delivered to markets at a faster pace. Furthermore, given we have a balanced customer structure comprising middle and large chain fast-food restaurants, food processing factories and retailers, therefore the impact of the incident is mitigated.
Mr. Han Jia-Hwan, Chairman of the Board of DaChan Food, commented, "The Group is working closely with the government to make the situation stable for breeding farmers and to restore consumers' confidence as soon as possible. The impact of the policies and activities of the government and relevant departments on our business is also monitored intensively. With an aim to provide safe chicken meat products under the traceability system, the Company will, amid this epidemic burst, continue to strengthen its branding appeal of assurance and promotion services for 'Sisters' Kitchen' in order to create greater influence and business value. When the market recovers, we would be the first to seize the opportunities and turn market impact into dynamics."