Profits triple at leading Chinese poultry firm

By Mark Godfrey

- Last updated on GMT

The Chinese business plans to create product development jobs with demand high for easy-to-cook poultry
The Chinese business plans to create product development jobs with demand high for easy-to-cook poultry

Related tags: Meat

One of China’s leading poultry firms is reporting a bumper first half for 2016 thanks to domestic and export demand for its cooked poultry products. 

Henan Huaying Agricultural Development Co​ has reported net profit of RMB68m (£7.8m) for the first six months, an increase of 223.69% on the same period last year, while revenues at RMB1bn (£115m) jumped by 13.58% over the same period.

The company is crediting better cost control and expansion of its online and offline sales network for the performance, but it’s also pointing to a take-off in its sales of cooked meat products both at home and abroad. In a statement, the company has “been performing very well in cooked food development, marketing, sales channel development and exports​”.

Headquartered in the very populous central province of Henan – giving it access to a vast consumer base and logistics network – Huaying has supply deals with Yum Brands’ KFC outlets as well as well-known duck restaurant chain Quanqude. It also supplies convenience chain-store Century Lianhua and big-box retailers Carrefour, RT-Mart and WalMart. It also ships product to Li & Fung, the giant Hong Kong sourcing company.

Product development investment

But Huaying has also been working hard to find “strategic cooperation partners​” in Japan​, South Korea​ and the EU​. “We want to accelerate the pace of exports of cooked products, especially chicken cooked-food products,​” the company said, noting that it has secured its first sales for cooked poultry products in Japan and South Korea, the two key high-income markets in East Asia.

The company sees the growth in demand for convenience-oriented chicken meals as another key driver of growth and is seeking to hire staff in product development, marketing and online logistics. This is a strategy similar to that also being pursued by its competitors including Sunner Development Group​, which is located in southern China.

Huaying’s figures for the first half of 2016 show frozen processed duck was by far its most profitable business in the period, with a gross profit margin of 78%. Frozen chicken – which includes frozen chicken burgers and meals – is a distant second with a 15% profit margin.

The chicks business returned a profit margin of 3.38% and its egg business just 0.3%. Huaying lost money on its feed sales with a margin of -0.32%. Huaying gets 5% of its sales from exports.

Aside from supplying chicken to big-name retailers and restaurants, Huaying has long aimed to be China’s first international duck brand. To that end, it has been building a network of distributors across China and Hong Kong while also seeking to promote its duck products through online sales channels.

Roast duck remains a draw with Chinese diners while vacuum-packaged duck products like duck tongue and duck feet are sold in convenience stores nationwide. Huaying advertisements on Henan regional TV channels praise duck as a healthier option to other meats, including chicken.

Related topics: China, Poultry, Financial, Pork

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