China animal feed sector profit up, operating revenue down

China animal feed sector profit up, operating revenue down

Decreasing costs of feed ingredients accounted for gross profit margin increase

With the weak performance of livestock farming, significant decline of the number of hogs and decreasing demand for animal feed, the operating revenues of China’s animal feed sector in the first three quarters of 2015 totaled to US$19.39 billion, down three percent year on year. Meanwhile, the gross profit margin of the same period was 11 percent, up 1.64 percent year on year, reported Feedtrade.com. It was the decreasing costs of the feed ingredients, especially prices of the corn and soymeal that accounted for the increase of the gross profit margin.

According to the data collected by China Feed Industry Association, which had tracked the business of 180 Chinese feed companies, the pig feed production of these companies in the first nine months of 2015 fell 16 percent year on year; the production of aquatic feed decreased by 14.4 percent. As for the poultry feed, the output of the feed for layers declined 4.4 percent compared with that of last year, while the yield of the feed for broilers increased 13.7 percent year on year.

In the fourth quarter of the year, with the upturn of the hog prices, the year-on-year decline of the sales volume of the pig feed began to narrow; sales changes of the aquatic feed are not obvious with the arrival of the off-season. The feed sales for broilers are likely to grow from 2014 and the sales for layer feed might stay flat with last year. According to Feedtrade.com, the sales volume of feed in 2015 as a whole is expected to see another downturn since 2013.

The Deputy Secretary General of China Feed Industry Association Sha Yusheng said on November 23 that the number of feed production companies is fewer than 9,000, compared with 7,000 in 2014. Of the 10 leading feed companies including Tongwei Co. Ltd., Haid and Zhengbang Group, only four of them reported year-on-year revenue growth.