Fufeng Group (HKG:0546) Records Net Profit Of RMB966 Million For 2010, Off-Setting Rising Costs With Efficient Production
Hong Kong, Mar 23, 2011 AEST (ABN Newswire) - Fufeng Group (
HKG:0546) (PINK:FFNGY) ("Fufeng" or "the Company", together with its subsidiaries collectively known as "the Group"), the largest manufacturer and supplier of MSG in China and the largest manufacturer of xanthan gum in the world, today announces its annual results for the year ended 31 December 2010 ("year under review").
During the year, the Group recorded the significant growth in the revenue and sales volume and achieved another record high. The Group's revenue in 2010 was approximately RMB 6,416 million, representing an increase of approximately RMB 1,783 million or 38.5% as compared with that of 2009. Profit attributable to the Shareholders in 2010 was RMB 966 million, representing an increase of 4.1% as compared to 2009. Earning per share for the year ended 31 December 2010 amounted to HK 67.87 cents. The Board has recommended the payment of final dividend of HK 15 cents per share for the year ended 31 December 2010.
The sum of declared interim dividend and proposed final dividend for the year ended 31 December 2010 is HK 26 cents per share. The significant growth in revenue was driven by the increase of sales volume and the increased production capacity which expanded its market share. Moreover, both the production and sales volume of MSG and xanthan gum products reached new height during the year, thus further strengthening our leading position in the PRC market and making us stay further ahead of our competitors.
Given that the PRC continued its strong economic growth, the average selling price of the Group' MSG products increased by 2.9% as compared to 2009, however, the prices of raw materials (corn and chemicals) and coal increased significantly. The increasing percentage of selling price of the product is lower than the percentage increase in major raw material cost as the market concerned the capacity expansions. The gross profit margin of the Group was under pressure.
Commenting on the results, Mr. Li Xuechun, the Chairman of Fufeng said, "In 2010, the production capacity, production volume, sales volume and sales revenue of the Group reached new records, 2010 also marked a year in which both the production and operation of the Group were faced with challenges. To weather the unfavorable factors of rising material prices, the Group managed to control costs through economies of scale and efficient operation by riding on its leading market position, and further expanding the production capacity of the production plants in Inner Mongolia and Baoji. Meanwhile, to further extend the upstream development of the industry chain, a production line of 80,000 tonnes of synthetic ammonia is under construction in order to enhance the productivity and capacity utilisation, to further offset the pressure of rising costs."
During the year under review, the Group fastened our competitive advantages to benefit our long-term development and took a strategic move to establish an important new production base. In June 2010, the Group began to build a new plant in Zhalantun in the northeast China.
The first phase of 200,000 tonnes of MSG as well as supporting thermal power plant and fertilisers will be put into trial production in mid 2011. This plant will become a new highlight of the Group's capacity expansion.
The Group's new product - threonine was put into trial production in mid of 2010, with a current annual production capacity reaching 10,000 tonnes. The product has been well recognized and affirmed by the market and the clients. Threonine is set to become another major product of the Group following MSG and xanthan gum products. The production capacity will expand rapidly in the next few years.
For the Xanthan gum segment, the Group continued to expand its production capacity of xanthan gum in Inner Mongolia plant to further expand its market share. During the year, benefited from the global economic growth as well as the recovery of oil industry at the end of 2009, the revenue generated from the sales of xanthan gum increased to approximately RMB 682 million in 2010, representing an increase of 67.0% as compared to that of 2009. Despite the slight drop in ASP of xanthan gum due to price competition, the increase in sales volume was significant and the gross profit margin of xanthan gum increased. It is a result of effective global market promotion and also shows that the Group's products have become more popular to consumers. The market share of the Group has been continuously expanding.
Looking forward to 2011, the Group will focus on following aspects:
I. Speed up the research and development and launch of new products: the Group will continue to enrich its product portfolio, and will step up its efforts to develop a wide range of corn-based biochemical products, such as citric acid. Such corn-based biochemical products have large market demand and a broader scope of uses. The Group will continue to invest resources in research and development activities to ensure the sustainable long-term profitability can be achieved.
II. Enter into the seasoning market: the Group has appointed a brand marketing director to implement systematic management, to plan our marketing exploration of small pack of retail products, and to set up a dedicated marketing team to quickly meet the sales demand of fast-moving consumer goods. Meanwhile, the Group has selected a number of regions such as Shandong, Jiangsu, Zhejiang, Guangdong and Chongqing as the key markets for the development of the seasoning products, and will work hard to ensure a breakthrough in these markets.
III. Strengthen logistics support and ensure raw material supplies: in 2011, the Group will explore new ways to procure corns in response to the ever changing market environments such as the establishment of stable partnerships with large grain suppliers, in order to broaden our corn supply channels and to further ensure the stable supply of raw materials.
Looking ahead to 2011, Mr. Li said, "2011 will be a critical year for the long-term development of the Group. The Board of Directors believes, although the global economy remains uncertain, the improved living standard, the strong demand of corn-based biochemical products, food additives and food seasoning, the Group has established a solid foundation and possessed unparalleled advantages over its competitors. The Group is confident of its future outlook, and is committed to becoming - the world's leading corn-based biochemical supplier.
For the complete Fufeng announcement including tables, please refer to the following link:
http://www.abnnewswire.net/media/en/docs/66660-Fufeng_2010AR_press_release_Eng-(110321).pdf
About Fufeng Group Limited
Fufeng Group (
HKG:0546) is the world's largest producer of MSG, xanthan gum and a major supplier for a series of bio-fermentation products. The main products of the Group are food additives, animal nutrition, colloid and high-end amino acids. In fiscal 2016, Fufeng generated sales of approximately RMB11.2 billion and profit attributable to shareholders of about RMB1.09 billion. For more information, please visit our website www.fufeng-group.com
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