DaChan Food Reports Strong Processed Segment

CHINA - DaChan Food has delivered robust business performance, accoridng it its annual report 2009, just published.
calendar icon 18 March 2010
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DaChan Food (Asia) Limited, one of the largest chicken meat products and feeds suppliers in China, has announced its annual results for the year ended 31 December 2009.

Although the operating environment remained challenging as slower demand and an oversupply in the PRC's chicken meat market led to lower average selling prices, DaChan Food managed to delivered robust business performance for fiscal 2009 as turnover held steady at US$1,242.1 million, down just 4.0 per year-on-year, thanks to a better product mix and an expanded sales network, while the businesses of external feeds sales and processed food operation continued to achieve good results.

The processed food segment in particular performed exceptionally well thanks to an improved product mix, a more diverse sales network and the Group's strong brand position. Operating revenue from the segment as a percentage of the Group's total turnover rose to its highest level at 7.2 per cent. Gross profit of the segment was up 445.3 per cent year on year. Since 2009, the Group has begun to leverage the strengths of its Sisters' Kitchen brand and that of its product traceability system to help enhance the DahChan Food brand and drive better business performance. Since 2009, the Group has successfully put its branded products on the shelves of major supermarket chains in Beijing, Shanghai and Tianjin, including Tesco, Carrefour and Wal-mart. Meanwhile, four Sisters' Kitchen deli stores have already been launched in Beijing.

Chicken meat and feeds sales remained the largest business drivers for the Group, contributing 47.8 per cent and 45.0 per cent of the Group's total turnover, respectively.

Mark Han, Chairman of DaChan Food said: "The operating environment for our business in fiscal 2009 was challenging as we struggled with high raw material costs and low average selling prices in our chicken meat segment. However, thanks to our diversified sales channels, enhanced product mix and solid operating platform, we have been able to maintain our solid position as a leading provider of quality meat products to internationally renowned food chain stores including KFC, McDonald's, Dicos and other key customers."

In 2010, the Group will focus on improving production efficiency and utilisation rates. By boosting the share of higher-margin processed food in the mix of products that we sell to major fast food chains, the Group hopes drive sales further.

The Group expects the feeds to external customers segment to continue to grow steadily in 2010. The Group will continue to develop and expand its distribution channels with large pig farms in order to increase its share of the market and improve margins. Furthermore, the Group will establish a new R&D centre to help launch more new products to meet market demand.

As for the processed foods segment, the Group will primarily focus on expanding its business in the PRC market and opening more Sisters' Kitchen deli stores in first tier cities. At the same time, the Group will step up its efforts in further developing the existing distribution channels to accelerate growth. For the export business, the Group will increase its emphasis on developing new products for existing customers while further expanding the restaurant, supermarket and convenient store markets in Japan, Singapore and Hong Kong.

With the continued improvement in living standards, and along with the economic stimulus measures launched by the government to spur domestic consumption, the Group expects the demand for chicken meat to continue to grow in 2010. DaChan Food is ready to seize market opportunities to achieve further growth.

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