Profits triple at leading Chinese poultry firm

18-Aug-2016 - Last updated on 19-Aug-2016 at 11:34 GMT

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

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.