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China Essence Group, one of the leading integrated producers of potato products in China, says net profit surged in the fourth quarter (4Q FY2010) 2010 surged 186% to RMB30.1 million ($6.25 million) from RMB10.5 million in the previous corresponding period (4Q FY2009).
In 4Q FY2010, China Essence registered revenue of RMB204.3 million, a 15% increase from RMB177.1 million in 4Q FY2009, bouncing back from a challenging first half of calendar year 2009 (1H FY2010) where the global economic crisis took its toll.
On a year-on-year basis, net profit fell 25% to RMB136.4 million in FY2010 from RMB182.5 million in FY2009.
The group recorded revenue of RMB834.3 million for FY2010, a decrease of 6% from the previous corresponding period (FY2009).
This was due to an overall decrease in sales volumes and average selling prices (ASP) led by the significant slowdown in consumer spending in China during the first half of FY2010.
Revenue from potato starch, which accounted for 61.9% of the group’s revenue, decreased 12.3% from RMB589.4 million to RMB516.6 million for FY2010. Sales volume for potato starch decreased 6.2% as food manufacturers in China, who mainly exported their products to international markets, reported a slowdown in orders for potato starch.
While revenue fell 4.2% for potato starch-based products (including vermicelli, potato starch strips and five-grain noodles), this product segment posted a 1.1% increase in sales volume, signalling some resilience in demand for such products.
Revenue from modified starch fell 16.3% while sales volume decreased by 4.9%.
While the economic situation in the first half of calendar year 2009 (1H FY2010) dampened overall consumer spending in China, China Essence says the wider economy has clearly improved in the first quarter of calendar year 2010 (4Q FY2010) and is encouraged by the signs of recovery in the potato starch industry, with orders picking up in anticipation of the Chinese New Year season, during which potato starch-based products are traditionally in high demand.
