Yuhe International, Inc., a leading supplier of day-old chickens raised for meat production in the People's Republic of China, has announced its financial results for the quarter ended 31 March 2010.

Net revenue increased 7.7 per cent to US$11.8 million compared to the same period last year. Sales volume grew 11 per cent from the same period to 25.6 million birds.

Gross profit was $3.9 million with gross margin of 33.2 per cent, while operating income was $3.0 million, 7.9 per cent lower than the first quarter of 2009. Net income increased 0.4 per cent to $2.9 million, or $0.18 per fully diluted share.

Zhentao Gao, Chairman and Chief Executive Officer of Yuhe International, commented: "While the first quarter is traditionally one of our slowest in terms of sales due to the cold weather and the Chinese Spring Festival, we saw an uptick in sales volume of our day old broilers. At the same time, gross margin was impacted by slightly lower selling prices and higher feed costs. We expect our financial performance to accelerate in the second half of the year when the approximate 176,000 parent breeders we recently purchased mature and begin contributing to production capacity."

First quarter 2010 results

Net revenue for the first quarter of 2010 increased 7.7 per cent to $11.8 million, compared to $10.9 million for the same period last year. The increase was mainly driven by the 10.8 per cent gain in sales volume of day-old broilers to 25.6 million from 23.1 million in the comparable period last year. The sales volume increase was slightly offset by the 2.7 per cent decrease in the average selling price per day-old broiler to RMB2.91 from RMB2.99 in the same quarter of 2009. Of net revenue, $10.9 million, or 92.6 per cent, was generated from sales of day-old broilers.

Gross profit decreased 4.0 per cent year over year to $3.9 million, compared to $4.1 million in the same period last year. Gross profit margin was 33.2 per cent, compared to 37.2 per cent in the same quarter last year. The decrease in gross profit margin is attributable to the 27.0 per cent increase in the price of corn, a major ingredient in chicken feed.

Operating income decreased 7.9 per cent to $3.0 million, compared to $3.2 million in the same period of 2009. Operating margin was 25.3 per cent, compared to 29.55 per cent in the same quarter of 2009.

Net income increased 0.4 per cent to $2.93 million, compared to $2.91 million in the same period last year. Fully diluted earnings per share were $0.18, compared to $0.19 in comparable period of 2009. For the first quarter of 2010, there were 16.1 million fully diluted weighted shares outstanding versus 15.7 million fully diluted weighted shares outstanding in the same period of the prior year.