China food giant Tingyi's sales and profit skid on slowdown, competition (updated)

Uni-President China Holdings

23/03/2015 05:54

* Tingyi 2014 net profit down 2 pct, trails forecasts 
    * Annual sales fall for first time since 1998 
    * Competition in market "intense" - Chairman 
    * Analysts eye boost in 2015 from lower input prices 
 
 (Adds chairman's comment, earnings details, context) 
    By Adam Jourdan 
    SHANGHAI, March 23 (Reuters) - China's largest food and 
beverage maker, Tingyi Holding Corp  0322.HK , said net profit 
slid 2 percent in 2014, falling well below estimates, as a 
slowing economy and fierce competition dragged sales down for 
the first time in almost two decades. 
    Hong Kong-listed Tingyi, owner of the Master Kong brand and 
a partner with PepsiCo Inc  PEP.N  and Starbucks Corp  SBUX.O  
in China  ID:nL2N0WL02K , said on Monday profit for the year 
fell to $400.5 million from $408.5 million a year earlier. 
    The result lagged far behind an average forecast of $445.7 
million compiled from around 30 analysts polled by Reuters. 
    Tingyi's chairman Wei Ing-Chou said in an earnings filing 
that market competition had been "intense" in 2014. The firm 
said in the filing it would focus on cost-cutting this year, 
with plans to reduce staff numbers in some segments and to look 
to mobile channels to boost sales. 
    "In 2015, the overall operation strategy of the group will 
switch to cost saving, efficiency enhancing, and innovation as a 
result of the sluggish economy and the nature of the consumer 
market," the company's chairman said. 
    Tingyi said total revenue was $10.2 billion for the year, 
down from $10.9 billion a year earlier, the first sales drop 
since 1998. The number was squeezed by a 4.5 percent drop in 
instant noodle sales, which accounted for 40.4 percent of 
revenue, and a 7.5 percent drop in beverage sales, contributing 
56.7 percent of revenue. 
    Analysts have said lower materials prices and Tingyi's 
advantage of scale over rivals - it commanded around a third of 
China's noodle market last year, according to Euromonitor - 
could help it soak up slowing domestic economic growth in 2015. 
    The firm competes with Uni-President China Holdings Ltd 
 0220.HK  and Want Want China Holdings Ltd  0151.HK , which 
announced an almost 10 percent drop in full-year net profit last 
week.  ID:nWNAS00IZ0   
    Shares of Tingyi were down 1.95 percent at around 1345 in 
Shanghai (0545 GMT) on Monday, but have risen 2.4 percent so far 
this year. The benchmark Hang Seng Index  .HSI  is up 3.8 
percent over the same period. 
 
 
 (Editing by Kenneth Maxwell) 
 ((adam.jourdan@thomsonreuters.com; +86 21 6104 1778; Reuters 
Messaging: adam.jourdan.thomsonreuters.com@reuters.net)) 
 
Keywords: TINGYI RESULTS/