Announces 2012 Annual Results - Continued to Enlarge Market Share, Achieved Economies of Scale
Hong Kong, Mar 29, 2013 AEST (ABN Newswire) - The largest global MSG and xanthan gum producer - Fufeng Group Limited (
HKG:0546) today announces the annual results for the year ended 31 December 2012.
In the period under review, major challenges including slow growth in China, weakening major industrial economies as well as poor consumer confidence led to weaker annual results. However, the Group's global market leading position was further enhanced in 2012 with the annual production capacity of monosodium glutamate (MSG) and xanthan gum exceeding 1,000,000 tonnes and 50,000 tonnes respectively. During the year, the Group managed to expand market share, laying a solid foundation to further achieve economies of scale in the future. Furthermore, the Group started to sell niche high-end amino acid products, diversifying its product mix and expanding its presence in high-end markets.
In 2012, Fufeng focused on sales volume and adopted a competitive pricing strategy to boost sales. Sales, production volume and market share reached record highs as a result. Revenue of the Group soared by approximately 32.3% to approximately RMB11.1 billion while gross profit margin dropped by approximately 3.4 percent points to approximately 14.7%. Profit attributable to shareholders slid by approximately 29.4% to approximately RMB423.7 million. Basic earnings per share was HK30.4 cents. The board did not recommend the payment of a final dividend for the year ended 31 December 2012.
MSG Segment
In 2012, revenue of MSG increased by about 37.1% year-on-year to approximately RMB 6.7 billion and its sales volume increased by about 53.1% year-on-year to approximately 940,000 tonnes. With the Hulunbeir Plant Phase 2 commenced production, the annual production capacity of MSG reached 1,050,000 tonnes. To address the weak domestic consumer confidence, particularly in the fourth quarter, the Group promptly implemented a flexible pricing strategy, demonstrating its low cost advantage, to capture market share swiftly and speed up the elimination of competitors. While this resulted in fall in gross profit margin, sales of other related by-products increased significantly. Sales of fertilisers and corn refined products rose by 53.2% and 40.2% respectively, offsetting partial decrease in profits caused by reduction in MSG prices.
Restructuring and consolidation of the domestic MSG industry in the last two years drastically reduced the number of industry players with a significant result. The Group achieved a breakthrough in market share and its leading advantage as the dominant manufacturer was reinforced. During the year, the Group actively promoted its branded "U Fresh" series products and developed overseas markets. Exports increased by 32.7% year-on-year to RMB833.2 million which accounted for 12.4% of total MSG sales.
Xanthan Gum Segment
In light of strong demand for xanthan gum from the international oil and gas extraction industries, the Group opportunistically and timely adjusted selling prices leading to rising sales volume and prices. In 2012, revenue of xanthan gum increased by 27.6% year-on-year to approximately RMB1.07 billion whereas average selling price surged by approximately 11.9% year-on-year. Sales volume amounted to approximately 52,000 tonnes, representing an increase of approximately 13.9% as compared to 2011. Exports contributed to approximately 86.4% of total sales (2011: 88.5%). Annual production capacity rose by 13.1% year-on-year to approximately 49,000 tonnes.
The Group took resources advantage, the Xinjiang Plant Phase 1 commenced production at the end of 2012, and Phase 2 has been in the process of installing production facilities. Fufeng's xanthan gum products will be more competitive in the future. In January 2013, based on the preliminary results of the United States Department of Commerce anti-dumping investigation against Chinese enterprises regarding the import of xanthan gum, Fufeng was considered to be involved in relatively less serious anti-dumping duties than other xanthan gum companies in China. This should help the Group further expand its global market share and consolidate its position as the largest xanthan gum supplier globally.
High-end Amino Acid products
Apart from xanthan gum, the Xinjiang Plant also produces high-end amino acid products including valine, arginine, leucine, isoleucine etc. These products, with an annual production capacity of 3,000 tonnes, targeting niche customers in the healthcare and pharmaceutical materials industries, have been launched in the market. The Group believes the positive outlook for this niche industry will help it expand gradually from producing traditional bulk amino acid products to high-end amino acid products.
Mr. Li Xuechun, chairman of Fufeng said, "Although our results were weaker in 2012 given all the challenges we faced, we are confident that the Group's leadership will be further consolidated, leveraging its competitiveness when market conditions gradually improve. Meanwhile, the Group's optimized domestic production capacity footprint and the MSG industry consolidation had effect. We have built a strong foundation for the long-term growth and development of the Group and we will deliver consistent and sustainable return for our Shareholders going forward.
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Link:
http://media.abnnewswire.net/media/en/docs/74905-Fufeng_en.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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