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China's COFCO Meat Posts Loss as Swine Fever Rocks Hog Industry
BEIJING, Aug 27 (Reuters) - Chinese pig producer COFCO Meat Holdings Ltd fell to a first-half loss of 276 million yuan ($38.9 million) from a small profit a year ago, as falling hog prices and spending to protect against disease eroded profits.
Like other big producers Muyuan Foods Co and Wens Foodstuff Group, COFCO has been hit by market turmoil following an epidemic of African swine fever, a fatal pig disease that has killed millions of pigs in China.
After adjusting for the value of its biological assets, mainly sows and unsold pigs, COFCO said profit attributable to the company's owners came to 142 million yuan, up from a 243 million yuan loss a year ago. Hog prices are significantly higher this year due to the disease outbreak.
COFCO said it would not pay a dividend for the first half.
The company, a unit of state-owned grains trading house COFCO Group, produced 1.45 million pigs in the first six months, up 15% on a year ago, but the segment generated losses of 436 million yuan, about four times last year's loss.
It blamed the losses on low hog prices and higher spending to protect farms against disease.
Still, COFCO said it planned to expand the number of sows to take advantage of the tight supply of hogs following the disease outbreak.
China's hog herd has shrunk by around a third since a year ago, according to official data, although many estimate the losses to be much higher.
Tight supplies of pigs will continue into next year, the company said, supporting prices.
COFCO said it also plans to build a third slaughterhouse in northeast China to meet a shift away from transporting live hogs to transporting meat instead. The plant will have capacity for 1 million pigs.
Revenues at the group rose 35% to 4.4 billion yuan, thanks to a large rise in meat import volumes.
Sales of imported meat came to 1.68 billion yuan, up 77% from a year ago.
About half of the import volumes, or 31,000 tonnes, were beef, which rose 129% on a year ago, and COFCO said expanding beef import volumes was a "strategic focus".
China's meat imports are significantly higher this year as buyers stock up ahead of an expected huge pork shortage caused by the swine fever outbreak.
($1 = 7.0928 Chinese yuan renminbi) (Reporting by Dominique Patton; editing by Richard Pullin)
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