Zhongpin to Increase and Streamline Production Capacity
12 Marzo 2009 - 9:00PM
PR Newswire (US)
- Increases Annual Prepared Meat Capacity by 133% - Increases
Annual Fruit and Vegetable Capacity by 14% - Increases Annual
Chilled and Frozen Pork Capacity by 9% CHANGGE CITY, China, March
12 /PRNewswire-Asia-FirstCall/ -- Zhongpin Inc. (NASDAQ:HOGS)
("Zhongpin"), a leading meat and food processing company in the
People's Republic of China ("PRC"), today provided an update on its
plan to increase and streamline its production capacity. Zhongpin
will begin construction starting in April 2009 of a pork production
facility in Tianjin City and a prepared meat facility in Changge
City, Henan Province. The new pork production facility, located in
the Jinghai Economic Technical Development Area in Tianjin City,
will increase total annual pork production capacity by 136,000
metric tons. The facility will be designed to process 100,000
metric tons of chilled and frozen pork products annually, of which
70% will be dedicated to chilled pork and 30% to frozen pork. The
facility will also include annual production capacity of 36,000
metric tons of prepared meat products. This facility is expected to
cost $52 million, excluding the investment in land use rights, and
will be equipped mostly with state-of-the-art, imported equipment
and machinery. The construction of the new Tianjin facility will
also include a new warehouse and distribution center, and a R&D
center, which will improve Zhongpin's product portfolio, support
cold chain logistics and effectively accommodate the newly added
production capacity by facilitating efficient distribution. The
production lines for chilled and frozen pork products are expected
to come online at the end of the first quarter of 2010 and will
achieve its target utilization rate at the end of the third quarter
of 2010. The prepared meat production line and the new warehouse
and distribution center are expected to come online by the end of
the second quarter of 2010 and will achieve its target utilization
rate at the end of the fourth quarter of 2010. Without causing any
interruption to its current marketing and distribution program,
Zhongpin intends to terminate its lease at the existing Tianjin
City facility after production at the new facility begins. With the
addition of the new facility and closure of the existing facility
in Tianjin City, Zhongpin's annual chilled and frozen pork
production capacity will increase by 9%, reaching 545,760 metric
tons from the current 498,760 metric tons. Zhongpin's new prepared
meat facility, located in Zhongpin's Industrial Park in Changge
City, Henan Province, will increase annual prepared meat production
capacity by 36,000 metric tons. The construction of this facility
is expected to cost $21 million and it will be equipped with
advanced equipment and machinery imported from top-tier
international manufacturers. The facility will produce quick-freeze
sausages and other prepared meat products catering to varying
consumer tastes. The construction of the facility is expected to be
completed and commence production by the end of the fourth quarter
of 2009. The new facility is expected to achieve its target
utilization rate by the end of the second quarter of 2010. With the
additional prepared meat production capacity from the new Tianjin
and Changge City facilities, Zhongpin's annual prepared meat
products capacity will increase by 133% to 126,000 metric tons from
the current 54,000 metric tons. Zhongpin recently completed the
construction of its fruit and vegetable processing facility in
Changge City, Henan Province, adding an annual production capacity
of 30,000 metric tons. Zhongpin expects to begin production by the
end of March 2009 and plans to discontinue outsourcing from its OEM
partners which provide an annual production capacity of 2,880
metric tons, and will also transfer the existing fruit and
vegetable production at Zhongpin's Industrial Park, which has an
annual production capacity of 12,600 metric tons, to the
newly-built fruit and vegetable processing facility. The Board of
Directors of Zhongpin approved the closure and disposal plan of
Yanling facility in Henan Province which has an annual fruit and
vegetable production capacity of 10,800 metric tons. Due to the
urban expansion in Yanling City and the latest environment
protection restrictions imposed by the China Environment Protection
Agency, maintaining fruit and vegetable production operations in
Yanling City will require a huge amount of incremental investments.
All fruit and vegetable production will be gradually consolidated
into the new production facility as it comes online. With the
additional capacity from the new facility and further consolidation
of existing capacity, Zhongpin's annual fruit and vegetable
production capacity will increase 14% to 30,000 metric tons from
the current 26,280 metric tons. "We are pleased to announce the
next stage of our capacity expansion plan. While pork consumption
has been temporarily impacted by the economic slowdown in China,
our mid to long-term outlook for China's pork industry remains
favorable. Government mandates designed to modernize the pork
industry have hastened the transition from traditional wet markets
to modern dry markets and we are optimistic that the RMB 4 trillion
economic stimulus package will have a positive impact on the
economy in the latter half of 2009," commented by Mr. Xianfu Zhu,
Chairman of the Board and CEO of Zhongpin. "We are confident in our
ability to bring these new facilities online as planned, quickly
ramp up production and continue to grow our business. The new plant
in Tianjin City will facilitate our strategic penetration into
Northern China, which is one of our primary target markets. Our new
prepared meat facility will be located in Henan Province to
effectively utilize the advanced R&D capabilities at our
headquarters. Our aggressive expansion plans focus on the growth of
our prepared meat products line as it offers attractive margins and
will help optimize our product mix. As a profitable supplement to
our product portfolio, our fruits and vegetables product line will
continue to positively contribute to our future growth. We strongly
believe that our current cash position combined with our available
lines of credit will be sufficient to support our growth strategy."
About Zhongpin Zhongpin is a meat and food processing company that
specializes in pork and pork products, and fruits and vegetables,
in the PRC. Its distribution network in the PRC spans 24 provinces
and includes over 2,995 retail outlets. Zhongpin's export markets
include the European Union, Eastern Europe, Russia, Hong Kong,
Japan and South Korea. For more information, contact CCG Investor
Relations directly or go to Zhongpin's website at
http://www.zpfood.com/ . Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995: Certain statements in
this press release and oral statements made by Zhongpin on its
conference call in relation to this release constitute
forward-looking statements for purposes of the safe harbor
provisions under The Private Securities Litigation Reform Act of
1995. These statements include, without limitation, statements
regarding our ability to build and commence the new production
facilities according to the timeline described, expectations of
future consumer demand, ability to prepare the Company for growth,
predictions and guidance relating to the Company's future financial
performance. We have based these forward-looking statements largely
on our current expectations and projections about future events and
financial trends that we believe may affect our financial
condition, results of operations, business strategy and financial
needs, but these projections also involve risks and uncertainties
that could cause actual results to differ materially from those in
the forward-looking statements, which may include, but are not
limited to, such factors as, unanticipated changes in product
demand, interruptions in the supply of live pigs/raw pork,
downturns in the Chinese economy, delivery delays, freezer facility
malfunctions, poor performance of the retail distribution network,
changes in applicable regulations, and other information detailed
from time to time in the Company's filings and future filings with
the United States Securities and Exchange Commission. You are urged
to consider these factors carefully in evaluating the
forward-looking statements herein and are cautioned not to place
undue reliance on such forward-looking statements, which are
qualified in their entirety by this cautionary statement. The
forward-looking statements made herein speak only as of the date of
this press release and the Company undertakes no duty to update any
forward-looking statement to conform the statement to actual
results or changes in the Company's expectations. For more
information, please contact: Crocker Coulson, President CCG
Investor Relations Tel: +1-646-213-1915 Email: Web:
http://www.ccgirasia.com/ Warren Wang, Chief Financial Officer
Zhongpin Inc. Tel: +86-10-8286-1788 Email: Web:
http://www.zpfood.com/ DATASOURCE: Zhongpin Inc. CONTACT: Crocker
Coulson, President of CCG Investor Relations, +1-646-213-1915, or ,
for Zhongpin Inc.; or Warren Wang, Chief Financial Officer of
Zhongpin Inc., +86-10-8286-1788, or Web site:
http://www.zpfood.com/ http://www.ccgirasia.com/
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