American Dairy readies for expansion

Related tags Milk powder Milk

One of China's leading producers of milk powder and soybean
products, American Dairy, has got off to a strong start following
its formation in May 2003 and subsequent acquisition of Beibei
Foodstuff in November.

Net income increased by 526 per cent from $325,257 (€182,800) in 2002 to $2,036,807 for 2003. The company said that the increase in net income was attributable primarily to to a 57 per cent increase in sales. Additionally the company said that it had experienced a strong rise in gross profit margins to, up from 35 per cent to 58 per cent.

In line with the increased business, distribution expenses also rose sharply. Although offset by the rise in profits the company said that general and administrative expenses rose by 113 per cent, whilst there was a $333,020 increase in enterprise income tax expense.

Revenues increased by $6,886,542 or 57 per cent from $12,172,815 in 2002 to $19,059,357 in 2003. This increase, the company said, was due primarily to expanding market areas and adding new value added products. Unit sales prices remained constant during the year.

"Our goal by the end of this year is to achieve a substantial growth across the board,"​ stated Leng You-Bin, CEO of American Dairy. "Successful marketing efforts in 2003 have helped us create greater brand awareness and as a result have achieved significant revenue growth and profitability. We are excited as first quarter 2004 net profits are expected to exceed $1,000,000."

The company has also announced significant plans to construct new production facilities in Kedong County, where it has just purchased a 40 acre site. The company says that the site will be used to construct a new dairy processing plant with modern processing and packaging equipment imported from Denmark and Belgium.

It is projected that the new facility will be capable of processing 300 tons of fresh milk per day, increasing the company's production of milk powder by an additional 20,000 tons annually.

In addition, a new 20,000 ton per year soy bean powder facility is expected to be completed by October of 2004 in Heilongjiang. This region is a renowned centre for the production of soy bean products in China. The company says that the new facility will increase its production capacity and meet expansion needs for the next two years.

American Dairy conducts operations in the The People's Republic of China ("China") through its wholly owned subsidiary Feihe Dairy, which was acquired in May 2003. Founded in 1962, Feihe Dairy is one of the leading producers and distributors of milk powder, soybean milk powder, land related dairy products in China. Feihe Dairy's 99 per cent owned subsidiaries Sanhao Dairy and Baiquan Feihe Dairy produce and supply processed milk to Feihe Dairy.

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