Fufeng Group (HKG:0546) Announces 2011 Interim Results, Turnover Rose 28% to RMB 3,815.1 Million
Hong Kong, Aug 16, 2011 AEST (ABN Newswire) - Fufeng Group Limited (
HKG:0546) (PINK:FFNGY) ("Fufeng" or "the Company", together with its subsidiaries collectively known as "the Group"), a leading corn-based biochemical products manufacturer in China, today announces its unaudited interim results for the six months ended 30 June 2011.
In the first half year of 2011, the Group implemented a business growth strategy to increase its market share for both monosodium glutamate (MSG) and xanthan gum by leveraging its economies of scale, using competitive pricing strategy, and diversifying its products. As a result, it captured the business opportunity generated by the growing market demand for MSG and xanthan gum. Turnover increased by 27.7% year on year to RMB 3,815.1 million. Gross profit grew 11.6% year on year to RMB 828.4 million.
As the increases in raw materials (including corn kernels and chemicals) and coal price exceeded the rise in the average selling price of the Group's products, gross profit margin decreased 3.1 percentage points to 21.7%. Profit attributable to shareholders dropped 8.7 percentage points to RMB 420.2 million. Basic earnings per share for the first half of 2011 was HK 29.40 cents. The board of directors proposed an interim dividend per share of HK 10 cents.
For the first half of 2011, output of MSG increased by 18.9% year on year, while sales volume grew by 17.7% year on year. Xanthan gum output rose by 64.3% year on year while sales increased by 12.8% year on year. The growth in sales of these two major products enabled the Group to maintain its growth momentum.
MSG Segment
The MSG market in the PRC became increasingly concentrated due to industry consolidation and the Group has become the world's leading MSG manufacturer as it took advantage of the industry consolidation to further expand its market share. The Group has strategically controlled the products price at competitive level to boost its sales volume, and to prepare the new production capacity in the Hulunbeir Plant.
At the end of 2010, the Group and Ajinomoto Group in Japan signed a co-operative agreement under which Fufeng's threonine products are sold through the Ajinomoto sales and distribution network starting from 2011. The Group will rapidly expand its threonine production capacity in 2011, making threonine as one of core products and a growth driver.
Retail sector is expected to benefit from the business opportunities generated by the continuing growth of China's economy. The Group will continue to develop and promote its brand products in the industrial and retail markets. Specifically, the Group has established a "U Fresh" brand for its MSG products, which are widely sold in China's supermarkets and other distribution networks.
Xanthan Segment
Global market demand for xanthan gum began to recover in 2010. The Group has increased its production capacity and market share since 2009. The market demand for xanthan gum has continued to grow in the first half of 2011. The Group further strengthened the leading position in the xanthan gum industry.
Regarding the production of xanthan gum, the Group's IM plant has significant cost advantages. Due to the access to lower-cost coal locally, it counterbalances the impact from the decrease in the average selling price. The increase in production at the IM plant has given the Group pricing power over coal and helped to reduce overall production costs.
The sales increased by 12.8% year on year in the first half of 2011, reflecting an increase in the market share. The increase of business activities of oil industry became a strong driving force for the increased sales of xanthan gum. Due to the increasing demand from the food and other industries, the Group expects a continuous sales growth for xanthan gum.which will hit a new record.
Outlook
The Group expects the demand for its products will remain strong in the second half of 2011.
Mr. Li Xuechun, the Chairman of Fufeng said, "In order to capture the business opportunities, the Group will continue its core strategy of competitive pricing, and continue to expand production capacity and develop new products. It will also strengthen the brand promotion to maintain and expand its market share with an aim of maintaining the Group's industry leadership."
As to production capacity, the Group started trial production at Hulunbeir Plant Phase 1 in June 2011, and will begin commercial production in the third quarter of the year, bringing its annual MSG production capacity to 750,000 tonnes. Moreover, the production and sales of the new product - threonine launched into the market smoothly. Threonine will become the Group's another major product after MSG and xanthan gum. In addition, the Group will continue to enhance its brand promotion and develop its retail and industrial customer bases. This will enable it to extend its business from production to sales, supporting its business growth.
Fufeng is one of the leading vertically integrated manufacturers of corn-based biochemical products principally utilising fermentation technology in China. It is mainly engaged in production of MSG related products and xanthan gum. MSG products include MSG, glutamic acid, fertilisers, corn refined products, starch sweeteners, threonine, corn oil, branched-chain amino acid and chicken powder. Fufeng is the largest MSG and xanthan gum manufacturer in the world. For further information, please visit the Company website: www.fufeng-group.com.
For the complete Fufeng Group announcement, please view:
http://media.abnnewswire.net/media/en/docs/69016-Fufeng_Eng.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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