The gross profit for the year-end 2008 was $2.1 million, up 1.6%, compared to $2 million for the previous year-end. Gross profit margin rate for the year-end 2008 was 72.03%, as compared to 68.23% for the previous year-end. The development in gross margin is mainly attributable to a 5% to 10% increase in the prices of company’s products.
The increases in net income are mainly attributed to the high gross profit margin rate, low professional fees, and low general and administrative expenses in 2008 relative to 2007.
Liping Deng, president and chief executive officer of China Agri-Business, said, We are pleased that we were able to maintain our sales despite weather and natural disasters beyond our control. Despite these setbacks, we remain focused on growth through new product development and expansion of our sales and marketing efforts in China.
Deng added, During 2008 we launched a new sales and marketing initiative called the New Agriculture-Generator designed to expand our distribution network in China. One component of this initiative involves establishing relationships with farmers through agricultural cooperatives. Another component is the Super Chain Sales Partner campaign, whereby the company agrees to provide a $3,000 advance payment to participating retailers in exchange for their commitment to purchase and sell approximately $14,000 worth of the company’s products per year on an exclusive basis. We believe this program provides an opportunity to establish a direct connection with our primary consumers, the farmers, that will supplement our traditional sales network.
