CHANGGE CITY, China, May 16 /PRNewswire-Asia/ -- Zhongpin Inc. (Nasdaq: HOGS) ("Zhongpin" or the "Company"), a leading meat and food processing company in the People's Republic of China ("China"), today announced plans to upgrade its chilled and frozen pork production facility in Changge City, Henan Province and increase its annual production capacity of chilled pork by 22,000 metric tons ("MT").
The Company's existing chilled and frozen pork production lines at the Changge City facility have a total annual capacity of 59,760 MT. Without causing any interruption to its current production, the additional capacity of 22,000 MT will increase the total annual production capacity of the Changge City facility to 81,760 MT. Zhongpin's management decided to upgrade the Company's production lines to meet the growing demand for chilled pork products in Central China. The upgrade will involve enhancing the pre-cooling function of the slaughtering lines, increasing production capacity of chilled pork, and modifying the capacity design. In addition, Zhongpin will improve its cooling systems, sewage disposal systems, and other supporting facilities, by installing state-of-the-art equipment and machinery. The overall planned capital expenditures for the facility are expected to be approximately $6.0 million. The upgrade will be completed by the end of 2009.
"We are pleased to announce our plans to upgrade our chilled and frozen pork facility in Changge City and increase our chilled pork production capacity. Our annual chilled pork sales increased from $71.8 million in 2006 to $289.3 million in 2008, representing a 101% compound annual growth rate. Despite the decline in live hog prices and pork prices in the first quarter of 2009, our sales revenue from chilled pork increased nearly 57% to $86.3 million, representing 56% of our total revenue during the first quarter," commented Mr. Xianfu Zhu, Chairman of the Board and CEO of Zhongpin. "With the rapid growth in the new middle class population in China, acceptance of chilled pork has increased significantly over the past few years. We are very confident that our decision to upgrade and expand our capacity will enable us to effectively adjust the product categories and meet the growing demand for our chilled pork products, and increase our market share."
About Zhongpin
Zhongpin is a meat and food processing company that specializes in pork and pork products, and fruits and vegetables in China. Its distribution network in China spans 20 provinces and 4 cities with special legal status, and includes over 3,097 retail outlets. Zhongpin's export markets include the European Union and Southeast Asia. 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 upgrade and increase production at the facility 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.