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FEED,

2008 EPS .54 vs. .26


AgFeed Industries, Inc. Reports Record 2008 Financial Results

NEW YORK, March 16 /PRNewswire-Asia/ -- AgFeed Industries, Inc. (NASDAQ:FEED), the largest commercial hog producer and the largest premix feed company in China, today announced record financial results for the year of 2008:

-- Earnings of $0.54 per share compared to 2007 Earnings per Share of $0.26

-- Net Income of $16.95 million compared to 2007 Net Income of $6.66 million

-- Adjusted Earnings Per Share of $0.74

-- Adjusted Net Income of $23.21 Million

-- Revenue was $143.66 million up from $36.16 million in 2007

-- Gross Profit was $34.44 million

-- Cash and cash equivalents are $24.84 million as of December 31, 2008

-- Total Assets of $137.05 million as of December 31, 2008

Record 2008 Revenue

AgFeed experienced phased-in hog production revenue during the course of 2008, as new farms were brought on line. AgFeed sold approximately 410,000 hogs during the development of an annual capacity of up to 650,000 hogs. Revenue from premix and blended feed sales was $51.75 million, up from $36.07 million in 2007. Revenue from hog production was $91.92 million in 2008, up from less than one million dollars in 2007. Premix and blended feed accounted for 36% of revenue while hog sales accounted for 64%. The increase in premix and blended feed sales was due to AgFeed's relationship with 1,006 independently owned, exclusive AgFeed retail distribution stores. In addition, AgFeed broadened its direct sales efforts to over 660 commercial hog farms.

Record 2008 Earnings

AgFeed reported premix and blended feed related income from operations of $7.78 million on revenue of $51.75 million and net income on hog sales of $16.92 million on hog sales of $91.92 million, prior to the cost of the holding company of $6.66 million. These results reflected 23.97% gross profit margin for the company. Premix and blended feed earnings were driven by efficient cost management, increased economies of scale on raw material purchases, and long term annual supply agreements. AgFeed's income from hog operations was driven by the phasing-in of 30 producing hog farms starting in late 2007.

Management Comments

"2008 was a milestone year for the Company. As the year progressed, amid the dysfunctional international economic and credit crisis, AgFeed continued its acquisition program recognizing that the next couple of years will be taxing on all businesses," said Dr. Songyan Li, Chairman.

Gerry Daignault, COO said that, "In 2008 AgFeed improved all of the financial metrics that are key to building the Company's enterprise value. AgFeed's total assets were $137.05 million or $3.61/share as of December 31. AgFeed's cash and cash equivalents were $24.84 million and working capital was $46.04 million. Our operating cash flow was positive and the current asset to liability ratio is 4.58:1."

Reconciliation of Adjusted Net Income and Earnings per Share to GAAP Results

Adjusted net income excludes one time, non-operational, non-cash charges of $6.26 million, primarily related to investor conversion of $15.2 million of the $19 million, 3 year convertible note offering completed in February 2008. The remainder of this convertible note is $3.8 million as of December 31, 2008. Details of the one time, non-operational, non-cash charges are as follows: a) Amortization of the convertible note related warrant issuance, warrant beneficial conversion feature related charges and placement agent commissions paid to the placement agent amounted to a total of $5.7 million; and b) Currency translation loss of $0.6 million related to the conversion of our US dollars into Chinese RMB during the year.

Internal Controls

AgFeed's management, under the supervision and with the participation of its chief executive officer, chief financial officer and with the assistance of its internal controls consultant, Protiviti Shanghai Co. Ltd. has performed an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures and has concluded that no significant deficiency or material weakness was found in AgFeed's internal control process and the internal control over financial reporting was effective as of December 31, 2008. Furthermore, the material weaknesses disclosed in the 2007 audit have all been successfully remediated.

2009 Strategic Plan

AgFeed's plan will direct its mission through 2010 and 2011 during which time the Company believes that the Chinese markets will once again attain double-digit growth rates. Increasing urbanization and the swift growth of the Chinese middle class, strongly position AgFeed for the expanding Chinese consumer pork market.

AgFeed's strategic plan calls for a series of phases that encompasses the following programs:

1. Continue to build a strong financial base.

2. Consolidate the Company's hog farms through the implementation of advanced management and process systems.

3. Advance to the next levels of hog production by the implementation of a science based set of genetic programs which would increase throughput and birthing rates.

4. Invest in the expansion of distribution networks while fully branding AgFeed's products.

5. Expand AgFeed's marketing of its premix business products through the "BEST" brand label.

Future Sow Base Expansion

AgFeed intends to invest heavily in genetics with a target to support the expanding sow base from 2009's 31,500 sows to 50,000 sows over the next 24 months. The Company has started building its nucleus farm in Wuning China and will stock with pure lines while substantially upgrading the Company's farm environment with world-class bio security measures.

Stock Buy-Back Program

After initiating a Company stock buy-back program in early October, AgFeed decided to suspend this activity for a period of time. At its discretion, AgFeed, depending upon market conditions, may reinstitute the buy-back program.

2009 Annual Meeting of Shareholders

The Company announced that its 2009 annual meeting of shareholders will be held in the offices of Buchanan, Ingersoll & Rooney PC, located at Two Liberty Place, 50 S. 16th Street, Suite 3200, Philadelphia, PA 19102, on June 11, 2009 at 10:00 a.m. Eastern Daylight Time. April 15, 2009 has been established as the record date for determining the shareholders eligible to vote at the annual meeting. All shareholders are invited and encouraged to attend the meeting.

AgFeed currently expects that members of the Board of Directors and senior management will be present to meet with shareholders.

About AgFeed Industries, Inc.

NASDAQ Global Market listed AgFeed Industries (http://www.agfeedinc.com/) is a U.S. company with its primary operations in China. AgFeed has two profitable business lines -- premix and blended animal feed and hog production. AgFeed is China's largest commercial hog producer in terms of total annual hog production as well as the largest premix feed company in terms of revenues. China is the world's largest hog producing country that produces over 600 million hogs per year, compared to approximately 100 million hogs in the U.S. China also has the world's largest consumer base for pork consumption. Over 65% of total meat consumed in China is pork. Hog production in China enjoys income tax free status. The pre-mix feed market in which AgFeed operates is an approximately $1.6 billion segment of China's $40 billion per year animal feed market, according to the China Feed Industry Association.