China's Tingyi profit jumps, but says raw material costs a challenge

Uni-President China Holdings

26/11/2018 09:58

HONG KONG, Nov 26 (Reuters) - Tingyi Cayman Islands Holding
Corp  0322.HK , a Chinese partner of Starbucks  SBUX.O  and
PepsiCo  PEP.N , reported a 25.5 percent jump in quarterly
profit on Monday, but said its beverages business was facing
challenges from higher raw material costs and Sino-U.S. trade
tensions.
    The Master Kong brand owner said profit rose to 1.55 billion
yuan ($223.51 million) in the third quarter ended September,
from 1.24 billion yuan in the year-earlier quarter. The profit
growth rate slowed from 30 percent reported in the year-earlier
quarter.
    Revenue fell 4.2 percent to 18.86 billion yuan during the
September quarter. However, gross profit margin edged higher by
0.87 percentage point to 33.37 percent year-on-year.
    "Amidst changing consumer behaviors, fragmenting channels
and hovering price of certain raw materials under new economic
environment, it is expected that the instant noodle business
will develop steadily while the beverage business will still
suffer from the pain of business model adjustment in the
short-term," Tingyi Chairman Wei Ing-Chou said in an exchange
filing.
    Growth in instant noodle and beverage businesses slowed down
from a year earlier as sales channel fragmentation continued due
to a rapid growth in e-commerce and new retail channels, Tingyi
said. 
    Volatile financial markets and exchange rate changes also
added challenges, the company said.   
    China's food and beverages industry has been pressured by
slowing world economic growth and uncertainties related to the
ongoing trade conflict between Washington and Beijing, Wei said.
    In the first nine months, the company's profit jumped 47.6
percent to 2.86 billion yuan, while revenue rose 3.3 percent to
49.86 billion yuan.
    Earlier this month, smaller rival Uni-President China
 0220.HK  posted a 9 percent growth in third-quarter profit,
slowing from a 15 percent growth in the second quarter.
 urn:newsml:reuters.com:*:nL4N1XJ243
    
($1 = 6.9348 Chinese yuan)

 (Reporting by Donny Kwok; Editing by Amrutha Gayathri)
 ((donny.kwok@thomsonreuters.com; +852 2843 6470; Reuters
Messaging: donny.kwok.reuters.com@reuters.net))