China Agri-Business Inc. manufactures and distributes organic agricultural application products in China. The company recently commented on its full-year financial results for the 12 months ended December 31, 2009, noting its progress and expansion efforts, as well as its expectations for 2010.
Sales for the full-year 2009 increased $116,175, or 4.0 percent, to $3,038,560 in 2009 from $2,922,385 in 2008. The company attributes the increase primarily to positive response to its newly launched expansion campaign, the “New Agriculture-Generator.”
“In the fourth quarter of 2008, we started an aggressive initiative that we call the ‘New Agriculture-Generator.’ The primary purpose of the initiative is to expand our business by creating our own sales network of direct sales stores for our products and also by partnering with existing stores to create a super chain of branded stores that feature China Agri’s products. We believe this initiative will create closer relationships for us with farmers in the rural areas of China where our direct sales stores and the super chain stores are located,” Liping Deng, CEO, president, and director of China Agri-Business stated in the press release.
Net income decreased $291,078, or 21.6 percent, to $1,054,261 in 2009 from $1,345,339 in 2008, primarily due to the higher cost of goods sold.
Gross profit for the year decreased $131,952, or 6.3 percent, to $1,972,961 in 2009 from $2,104,913 in 2008.
China Agri-Business reported gross profit margin at 64.9 percent in 2009, down 7.1 percentage points from 72.0 percent in 2008. The company said it expects its gross profit to be lower in 2010 due mainly to the expansion of its new distribution channels.
“We made great progress as we expanded both of these channels in 2009. By year end 2009, we had 49 direct sales stores, controlled and managed by us, and 103 branded super chain stores. Those are just the start. These two distribution channels in 2009 together accounted for 34 percent of our sales for the year; two years ago, neither channel existed. The remaining 66 percent of our sales in 2009 were distributed through the traditional sales network that consists of independent wholesalers, distributors, and retailers,” the company stated.
China Agri-Business said that it will continue its aggressive expansion efforts and anticipates opening up to 500 direct sales stores by the end of 2010.
“As we continue our expansion and long-term growth programs in 2010, although they are likely to continue to pressure net income, we believe that they will create long-term value for our shareholders. An additional benefit is the support and encouragement we give to farmers, which we believe should further support our growth and success. We look forward to 2010 with great excitement,” the company stated.