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door upperkegel » za 28 jul 2012, 12:11
Quarterly Meeting Remarks. July 2012
I am very happy to have this opportunity to speak to all of you. Sadly it is rather infrequent that we are all in one place at the same time. I’m sure that you have many questions and thoughts that you’d like to talk about. While I may be able to anticipate many of these thoughts, and address them in these remarks, I may not cover everything that is on your mind. I encourage you to seek me out to talk about anything that may be on your mind.
Before I say anything else I would like to personally thank each and every one of you for the good work that you do everyday to drive our business forward. Without all of you we would not be together today.
After nearly a year of work we are finally approaching the end of a profoundly difficult period of self-examination that has been stressful and unsettling of us all. In the past our Company did not operate with the degree of operational integrity necessary to be a leader in our market. It has taken many months of work to untangle the historic financial records. Many of you in this room have been helpful in this process. Our goal is to put this work behind us during September. With the hard work of restatement behind us, we can concentrate on rebuilding the faith and trust of our shareholders while we turn back to growing our business.
It is essential that we are decisive and aggressive in putting the unacceptable practices of the past behind us. There is a code, a code of honor and integrity that we all must adopt and to which we all must subscribe and to which we will all be held strictly accountable. We cannot be dishonest, untruthful, or violate any law or accounting practice, nor can we tolerate anyone who does. This code of honor and integrity must guide each and every one of us everyday. I assure you that these are not empty words.
Bad news, or weak results cannot be hidden. It is only when we have full transparency and understanding of both the problems in our businesses as well as the opportunities that we can make good decisions for the future of the Company. We must be open to receiving and understanding bad news for through it we will be able to learn and improve and build success.
We are 1 Company and 1 Team – we are AgFeed.
I am sure that you have all heard that we have changed the name of our US based hog production business to AgFeed USA. The previous name – M2P2 – has been permanently retired. This reflects the fact that our US based business is at the very core of our strategic direction and it is important, both within the Company and for all of our customers, suppliers, growers and business partners to understand that we are 1 Company and 1 Team.
The technology, expertise and intellectual capital that allows AgFeed USA to be an industry leader in terms of operating efficiencies and production metrics provides the foundation of our international strategy. Our strategy is to be a leader in transforming hog production in China through the application of the techniques, procedures, processes and designs that have made the US the lowest cost, most efficient producer in the world. The farms we have built here in China represent the first steps in the development of modern production systems. Production systems that will set standards for 21st century enterprise scale live animal agricultural in China. At all times we will employ the highest standards for animal welfare and environmental stewardship, both cornerstones of assuring a safe food supply chain.
AgFeed has two businesses. Hog production and animal nutrition. Our management structure will evolve during the year to reflect these two distinct businesses.
Each of our businesses, animal nutrition and hog production has significant and exciting futures as part of AgFeed. The hard work that is being done today is all designed to position the company and the team for the future.
While the engine of our growth will be the expansion of our modern enterprise scale production systems we will not ignore our legacy farm assets. We must all remain committed to operating these legacy farms to the highest possible standards, employing all of our expertise and operating discipline to achieve all that we can on these farms.
We have challenges ahead of us, as we all continue with the hard work of improving our efficiency through the centralization and rationalization of key functions. All this effort is focused on strengthening the Company for the future and improving our cash flow, earnings and management discipline.
There remains a significant amount of work to do in connection with the organizational restructuring of our animal nutrition business. As the results of this hard work begin to show themselves in terms of improved cash flow and earnings we will once again turn to evaluating the growth opportunities available in AANI’s business segment. Opportunities for AANI abound, but the base, the core business, needs to be reset and core operations must meet desired benchmark profitability.
So what does all this mean?
Change will continue. Change in order to drive our business forward with greater efficiency, operational discipline, profitability, business growth, and opportunities for the professional growth and development of every member of the AgFeed team.
With change and challenge comes opportunity and accountability.
It means that we are putting the building blocks in place to grow our modern enterprise scale hog production systems. I do not mean merely building farms but building production systems. This will require the development of additional sow farms, and a finishing system to complete a southern production system using the facilities in Dahua and Xinyu as the base upon which to build in the south.
It means finding new locations for large-scale development. In addition to building out our southern system, perhaps the work we are doing at Datong will lead to an exciting opportunity.
It means identifying financial partners to fund our growth.
It means integrating our production systems with harvest systems, or with partners that will value the quality and efficiency of our live animal production. Embracing it as the very foundation of a verifiably safe food supply chain.
It means training and professional development for all members of the team and a relentless pursuit of professionalism.