Tingyi (Cayman Islands) Holding Corp (康師傅控股), China’s biggest maker of instant noodles and ready-to-drink tea, yesterday said it fully expected its core business to continue to grow this year.
“These two sectors allow us to enjoy higher margins and average selling prices in China, and will remain the two central pillars of our business growth,” Tingyi’s chief financial officer Frank Lin (林清棠) told an investor conference yesterday in Taipei.
The company’s gross margins hit a record high of 34.6 percent last year, compared with 32.2 percent in 2008, the statement said.
Gross margins for instant noodles rose to 31.5 percent last year, from 27.5 percent in 2008, while those of beverages averaged 36.9 percent, up from 36.2 percent a year ago, the statement read.
Turnover jumped 19 percent to US$5.1 billion (NT$163 billion), with profits rising 47 percent to US$383 million.
Beverages contributed 50 percent of Tingyi’s total revenues last year, while noodles accounted for 45 percent, the statement said.
Baked goods accounted for 3 percent of total revenues.
Lin said that Chinese consumers would soon follow in the footsteps of their peers in Taiwan and Hong Kong by ditching low-end packet noodles.
Consumers’ increasing preference for bowl and high-end noodles is in line with the company’s strategy to introduce foodstuffs with higher average selling prices in China, he said
“Moving into 2010, [Tingyi’s] beverages’ year-to-date sales orders are strong, but competition is fierce as more peers launch aggressive promotions,” Deutsche Bank said in a report on Monday. “We are more comfortable with [Tingyi’s] noodles, for which competition is less keen.”
Tingyi, whose food and beverages are mostly marketed under the Master Kong (康師傅) brand, competes against Coca-Cola Co, China’s Wahaha Group (娃哈哈) and Taiwan’s Uni-President Enterprises (統一) in the Chinese beverage market.
Distributors in China have placed more beverage orders with Tingyi to secure sufficient stocks ahead of the coming peak season. Tingyi repeated last year’s success by launching a One More Bottle promotional campaign this year with more products and geographical coverage, Deutsche said.
But rivals have also rolled out similar campaigns, adding pressure to the competition, it said.