February 26, 2020 / 1:05 PM / a month ago

UPDATE 1-China's Muyuan Foods reports bumper profit for 2019 on record hog prices

(ds detail, graphic)

BEIJING, Feb 26 (Reuters) - China’s No. 2 pig farmer Muyuan Foods Co Ltd said on Wednesday that full-year profits for 2019 surged more than 1,000% to 6.1 billion yuan ($869.84 million) thanks to record hog prices last year caused by a plunge in supplies.

The company, which sold more than 10 million pigs last year, benefited from a 140% increase in hog prices during the year, after an epidemic of deadly African swine fever killed millions of pigs and left many breeding farms empty.

China said the hog herd had shrunk by 41% by the third quarter of 2019, although some believe the damage was much worse.

The huge profit far surpassed all previous annual earnings for the company. Most of it - 4.88 billion yuan - came in the final quarter of the year, when hog margins were as high as 3,500 yuan per hog in some parts of China.

Though they have dropped slightly, margins remain well over 2,000 yuan across the country.

The high prices boosted Muyuan’s sales income by 51% to 20.2 billion yuan and also pushed its share price up by more than 200%.

The company also said it has started construction of three slaughterhouses in central Henan province, with annual capacity of 6 million hogs to respond to Beijing’s drive for more integrated pork producers.

It has also expanded production, but said earlier this month it had halted work at construction sites due to the impact of the coronavirus outbreak.

Muyuan shares closed down 3.3% on Wednesday at 116 yuan a share.

($1 = 7.0128 Chinese yuan renminbi)

Reporting by Dominique Patton, editing by Louise Heavens

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