China Essence Group, one of the largest, leading integrated producers of potato products in the country, says net profit for the first quarter of the financial year ended June 30 2011 (1Q FY2011) increased 145% to RMB17.7 million ($3.5 million), compared to RMB7.2 million in 1Q FY2010.

Revenue increased 60% to RMB145.6 million for 1Q FY2011 from RMB90.9 million in 1Q FY2010 driven by higher sales volume achieved for all its products in the midst of a strong rebound in overall market demand.

Revenue from potato starch for the quarter grew 142.1% to RMB76.8 million, compared to RMB31.7 million in 1Q FY2010. Sales volume of potato starch grew 88.4% and its average selling price (ASP) was up 28.5% from RMB4,668 per tonne to RMB5,997 per tonne in 1Q FY2011. Accordingly, gross margin for potato starch improved significantly from 25.6% to 40.5% in this quarter.

Sales volume for potato starch-based products and modified starch grew by 22.1% and 95.7% respectively in 1Q FY2011 while the ASPs for both product categories dropped marginally for the quarter. There were no sales of potato protein and fibre within this quarter as the company cleared its inventory in the fourth quarter of FY2010. Production and sales of these two products will re-commence in August.

Given the improved economic and market conditions, China Essence expects to remain profitable for the current financial year.