Turnover Increased by 37%
HONG KONG, April 22 /Xinhua-PRNewswire/ -- Fufeng Group Limited ("Fufeng" or "the Company", together with its subsidiaries collectively known as "the Group"; HKEx: 546), a leading vertically integrated manufacturer of corn-based biochemical products in China, announced its annual results for the year ended 31 December 2007.
During the year, driven by the increased sales volume of major products, the Group's turnover increased to RMB2,445.7 million, representing an increase of 37% compared to 2006. However, with the decrease in the average selling prices (ASP) of the Group's major products and the increase in the cost of raw materials, especially corn kernel, the Group's gross profit dropped to RMB249.7 million. The increase in transportation, administrative expenses also further lowered the Group's profitability. Fufeng recorded a profit attributable to shareholders for 2007 of approximately RMB 45.1 million. Its earnings per share for 2007 amounted to RMB 2.8 cents.
Commenting on the results, Mr. Li Xuechun, Chairman of Fufeng said, "Despite the challenging market conditions in 2007, the Group managed to maintain its leading position in the corn-based fermentation industry. During the year, we strived to capture the opportunity brought by MSG and glutamic acid industry consolidation and actively expand our market, our market share in the sector surged significantly to 23% in 2007 from 17% in 2006. As for xanthan gum, the Group actively expanded export business, the export portion of xanthan gum increased from 65% to 83%. Other than better selling price, the Group can also enlarge our market share in xanthan gum through exporting products."
During the period, the Group posted a healthy increase for its MSG segment. The sales volume of MSG increased by nearly 200% to 91,850 tonnes, this proves the Group's decision to shift its focus from glutamic acid to MSG production. Besides, fertilisers also recorded strong growth of 68% to reach 419,422 tonnes. Sales volume of xanthan gum increased by 14% to 6,216 tonnes; as the 10,000 tonnes xanthan gum production line in Inner Mongolia Plant only commenced operation in September 2007, it is expected that the Group will record strong growth in xanthan gum sales in 2008.
When talking about the Group's future strategies, Mr. Li said, "We believe we will overcome the difficulties in 2008; it is expected that the restructuring of MSG market will come to an end in 2008. Then the supply of MSG products will be stabilised and therefore the price may go up. With our self-produced glutamic acid and economies of scale, Fufeng will remain as the leading player in the market. Meanwhile, we believe that the xanthan gum market supply will stabilise this year whilst the demand will grow for more customers realize the advantages of the products. As xanthan gum production consumes less corn kernel, and our Inner Mongolia Plant enjoys low coal cost advantage, our production cost will decrease as we expand xanthan gum production. In the meantime, we will also increase domestic and export sales of xanthan gum as well as xanthan gum production capacity. We planned to increase xanthan gum production capacity to 28,000 tonnes at the end of 2008 or first half of 2009, by then, the Group will become one of the major xanthan gum manufacturers in the world."
"We will further consolidate and strengthen our leading position in the MSG segment and xanthan gum segment by leveraging our competitive strengths. Our ultimate goal is to become a leading corn-based biochemical product manufacturer in China and deliver satisfactory returns for our shareholders," Mr. Li concluded.
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, glutamic acid, fertilisers, corn refined products and sweeteners. Fufeng is the largest glutamic acid producer, and the second largest xanthan gum manufacturer in China in terms of production volume. You might visit the Company website for more details: http://www.fufeng-group.com .
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