Fufeng Announces its Outstanding 2010 Interim Results

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• USA - English

    HONG KONG, Aug. 18 /PRNewswire-Asia/ --

    Financial Highlights



    For the six months
     ended 30 June           2010(RMB million)   2009(RMB million)    Changes

    Turnover                          2,988.0             2,055.4      +45.4%
    Gross Profit                        742.1               577.0      +28.6%
    Gross Profit Margin                  24.8%               28.1%  -3.3 ppts.
    Profit Attributable to
     Shareholders                       460.1               353.9      +30.0%
    Return on Equity (ROE)*              34.3%               36.2%  -1.9 ppts.
    Return on Invested Capital
     (ROIC) *                            30.6%               32.7%  -2.1 ppts.
    Earnings per Share (Basic)
     (HK cents)                          31.8                24.2      +31.4%
    Earnings per Share (Diluted)
     (HK cents)                          30.0                24.2      +24.0%
    Interim dividend per share
     (HK cents)                          11.0                10.0      +10.0%

    * Calculated in annualised basis

Fufeng Group Limited ("Fufeng" or "the Company", together with its subsidiaries collectively known as "the Group"; HKEx stock code: 546), a leading vertically integrated manufacturer of corn-based biochemical products in China, today announces its outstanding interim results for the six months ended 30 June 2010.

During the period under review, the Group sustained strong growth momentum and achieved satisfactory sales performance in both MSG and Xanthan gum segments. Turnover surged about 45.4% year-on-year to approximately RMB2,988.0 million. Gross profit rose by about 28.6% to approximately RMB742.1 million. Gross profit margin maintained at a high level of around 24.8%, a slight decrease of 3.3 percentage points over the same period last year. Profit attributable to shareholders was up by around 30.0% year-on-year and amounted to approximately RMB460.1 million. Earnings per share (basic) for the first half of 2010 were HK31.8 cents. The Board has recommended the payment of an interim dividend of HK11 cents per share for the six months ended 30 June 2010.

Commenting on the results, Mr. Li Xuechun, Chairman of Fufeng said, "In the first half of 2010, the MSG industry thrived thanks to the robust performance of the China's economy. Although intense market competition and raw material costs increased sharply, the Group leveraged on its leading position of the industry and transferred the rising of raw materials price to clients, maintaining the gross profit margin of its MSG segment at a high level. With the strong sales performance of MSG products and xanthan gum, and the expansion of production capacity, the Group further enlarged its market share and sustained its outstanding results."

During the period under review, the average selling price of MSG augmented about 8.8% year-on-year to approximately RMB7,489 per tonne. Benefiting from the domestic consumption rebound in the PRC and capitalising on its leading position in the market, the Group focused on MSG production and stepped up marketing efforts to boost its sales. As such, the sales volume of MSG increased to 235,405 tonnes, representing an increase of about 79.1% over the same period last year. Revenue generated from the sales of MSG also gained a significant growth of about 94.7%, which was mainly attributable to the Group's large market share and the expansion of production capacity. In pursuit of its strategy of moving from glutamic acid to MSG, the Group decreased the sales volume of glutamic acid substantially from about 62,440 tonnes to about 12,309 tonnes.

Rising demand from the oil industry following the global economic recovery has led to a surge in the demand of xanthan gum around the world. During the period under review, the profit of xanthan gum increased to approximately RMB381.7 million, representing a year-on-year increase of approximately 105.2%. The average selling price of xanthan gum decreased slightly by 8.5% from approximately RMB21,853 per tonne to RMB19,987 per tonne. Despite the slight drop in the average selling price of xanthan gum as a result of the intense competition, both the sales volume and revenue of xanthan gum grew significantly by approximately 127.5% and 105.2% respectively. Utilising economies of scale brought by the expansion of plant in Inner Mongolia, the Group recorded a year-on-year increase of about 129.2% in the gross profit of xanthan gum which amounted to approximately RMB149.7 million. The gross profit margin of xanthan gum increased to 39.2%.

Driven by the strong domestic consumption demand in the PRC and a steady growth in the demand of MSG, the Group successfully extended its glutamic acid production downstream to MSG products during the period under review. It also made significant progress in venturing into retail markets by expanding the market share and increasing branding efforts in order to capture the condiment market. Targeting retail consumers, the Group launched a series of products such as the Uo Fresh MSG & chicken powder, Uo Fragent Corn Oil which were sold in over 2,000 supermarkets through its nation-wide distribution channels. Along with collaborating with brand ambassador, the Group also enhanced the product packaging with an aim of becoming the No.1 consumer product brand in the condiment industry.

In view of meeting the growing market demand and further reducing the production cost, the Group has started the construction of a new production plant in the intersection of Inner Mongolia Autonomous Region and Heilongjiang Province. The new plant has a production capacity of 200,000 tonnes of MSG, 160,000 tonnes of glutamic acid, 200,000 tonnes of fertilisers and 100,000 tonnes of synthetic ammonia which is expected to commence production in the second half of 2011. Capitalising on the abundant coal reserves in Inner Mongolida, the Group is committed to producing threoine and has completed a new production line with a capacity of 5,000 tonnes of threonine. In addition to this new line which will commence operation in the second half of 2010, the Group also intends to expand the production capacity of threonine by additional 5,000 tonnes in the second half of the year which is expected to yield new profits growth.

Looking forward to the second half of 2010, Mr. Li said, "The Group will continue to focus on the expansion of business coverage. It will strive to increase its market share through expanding the sales network which is supported by an advanced logistics system. Leveraging on its strong research and development capability, the Group will endeavor to diversify the product range so as to increase its sources of income and enhance its profit margin. Along with employing innovative and effective publicity strategies, the Group also plans to step up its marketing promotions and launch more advertisements to strengthen its brand image. Moreover, the Inner Mongolia Plant will be equipped with a new production capacity of 80,000 tonnes of synthetic ammonia and 5,000 tonnes of fructose, a newly built railway and a thermal power plant. Benefited from the low coal price, it is believed that this comprehensive revamp and the establishment of ancillary facilities will further lower the production and transportation costs in Inner Mongolia Plant, contributing to the long-term and solid growth to the Group."

A live and archived webcast of Fufeng 2010 Interim Results Announcement investor presentation is available at http://www.todayir.com/webcasting/fufeng_10ir/index.php .

About Fufeng Group Limited

Fufeng is one of the leading vertically integrated manufacturers of corn-based biochemical products principally utilising fermentation technology in China, and mainly engaged in MSG related products and xanthan gum production. MSG segment includes production of MSG, chicken powder, corn oil, glutamic acid, fertilisers, corn refined products and sweeteners. Fufeng is the largest MSG and xanthan gum manufacturer in the world. You may visit the Company website for more details: http://www.fufeng-group.com .

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SOURCE Fufeng Group Limited