China Minzhong increases profit by 27.6%

The food manufacturing group enjoyed higher sales in processed products and fresh vegetables for the year ending 30 June 2010.

China Minzhong Food Corporation Limited on Wednesday has reported a 27.6% increase in net profit from RMB288.1 million in financial year 2009 to RMB367.5 million in financial year 2010.

According to the company’s financial report, China Minzhong continued its steady growth trend with a 34.5% increase in revenue to RMB1,422.6 million in FY2010, and higher sales in both the processed products and fresh vegetables produce segments. Processed products constituted 67.7% of the Group’s revenue in FY2010 with the remaining 32.3% coming from fresh vegetables produce.

China Minzhong said revenue from the processed products segment rose 33.0% to RMB962.5 million on the back of higher sales volume for the Group’s air-dried, brined and freeze-dried products, and continued shift towards a higher value product portfolio underpinned by a 103.2% increase in the sales of the Group’s air-dried products, which led to a 35.4% increase in ASP.

Moreso, the group reported that revenue in the fresh vegetables segment increased 37.7% to RMB460.0 million, mainly due to a 24.8% increase in total cultivation volume to 137,100 tonnes and a shift towards a higher value fresh vegetables product portfolio.

China Minzhong said it has been increasing its cultivation volume for king oyster mushrooms, which commands higher selling prices and better margins.

Meanwhile, gross profit grew by 35.6% to RMB574.3 million, in line with the increase in revenue while overall gross margin improved slightly by 0.4 ppt to 40.4%. In tandem with the higher gross profit, the EBITDA increased by 30.3% to RMB535.4 million. Excluding net exchange loss and one-off IPO-related expenses, our adjusted EBITDA would have increased by 33.2% to RMB555.4 million.

Chief Executive Officer and Executive Director of China Minzhong, Mr Lin Guo Rong said, “We are pleased to deliver a very strong performance in our first full-year results after public listing. Our efforts in ensuring quality, food safety as well as our strategic focus on higher-value portfolio of products have paid off over the years. This year, we were once again named a “National Leading Dragon Head Enterprise” by the PRC government (eight consecutive years since 2002) and we will continue to build on this established track record and success.”

China Minzhong said pointed out that global consumption demand for both fresh vegetables and processed vegetables remains robust, fuelled by population growth, increased urbanization and rising affluence as well as preferences for healthy dietary eating habits.

China Minzhong will continue to benefit from both the growing domestic consumption in the PRC, and its emergence as an increasingly important vegetables supplier to the world, the report said.

“With clear and focused growth strategies in place, China Minzhong is poised to take advantage of opportunities from the continued strong demand for vegetables and increasing importance of the PRC as a global vegetables supplier. With our strong cash position of over RMB1 billion, we are well-positioned to fund our expansion plans going forward and take advantage of this growth trend,” added Mr Lin.