Tingyi (Cayman Islands) Holding Corp (康師傅控股), China’s biggest maker of packaged food, yesterday said it is raising prices of select instant noodles brands in China from April 1 by about 14 percent to cope with soaring ingredient costs.
The Taiwan-owned company is hiking prices of most bowl noodles, which account for 30 percent of its overall instant noodle offerings, in a bid to offset costs of rising palm oil, sugar and flour.
Increased costs are expected to erode the company’s gross margins by 2 to 3 percentage points this year, Tingyi chairman and chief executive Wei Ing-chou (魏應州) told an investors’ conference in Taipei.
Gross profit margin fell to 28.4 percent at the end of last year, from 34.6 percent a year earlier, because of rising raw material costs, according to the statement.
Net income rose 22.4 percent to US$612.6 million, translating to earnings per share of US$0.85.
Last year, sales of instant noodles climbed 27 percent year-on-year to US$2.9 billion, accounting for 43.9 percent of Tingyi’s total revenue. Beverage sales advanced 39 percent to US$3.5 billion, contributing 52.9 percent to overall revenue.
Tingyi — which owns the popular Master Kong and Fumanduo noodle brands — is competing against Uni-President Enterprises (統一企業), Coca-Cola Co and China’s Wahaha Group (娃哈哈集團) in the Chinese beverage and packaged food market.
“China’s beverage sales should remain strong this year, helped by a vibrant consumption mood and a predicted hot summer,” Deutsche Bank said in a report last month.
Similar to last year, challenges confronting such beverage companies as Tingyi include lingering high input costs and fierce competition, as more new products and new entrants come into play, said the securities firm, whose top buy is China Mengniu Dairy Co (中國蒙牛).
Beverage companies are set to continue spending more on advertising and promotion campaigns to stay ahead of the competition, it added.
Deutsche Bank said Tingyi will again launch the “One More Bottle” lucky-draw promotional campaign this year and rivals will follow suit for fear of market share loss.
Admitting the campaign’s -potential drag on its beverage margins, Wei said the company would introduce new probiotic drinks in China to diversify.
The company, however, will stay out of the dairy beverages category as they involve high doses of preservatives.
“We won’t compete with the likes of Mengniu in that area as it isn’t our core competency,” he added.
Tingyi’s shares inched up 0.4 percent to close at NT$36.1 on the Taiwan Stock Exchange yesterday before the earnings release.
The Hong Kong-listed Tingyi, which debuted its Taiwan Depository Receipts in December 2009, saw its shares here drop 17.2 percent last year.
NO VIRUS BLUES: A SEMI Taiwan official said that the virus does not slow down the global semiconductor industry’s investment in manufacturing equipment The production value of the nation’s semiconductor industry is expected to grow 16.7 percent this year from last year, outpacing the global industry’s 3.3 percent growth, industry association SEMI said yesterday. That would help Taiwan safeguard its second spot in the global semiconductor market with a production value of more than NT$3 trillion (US$102.73 billion), SEMI Taiwan president Terry Tsao (曹世綸) told a media briefing in Taipei for the Semicon Taiwan trade show beginning today. The global semiconductor industry’s production value is expected to increase to US$426 billion this year, SEMI said. In terms of semiconductor equipment investment, equipment billings from Taiwanese firms
Intel Corp has received licenses from US authorities to continue supplying certain products to Huawei Technologies Co (華為), a company spokesman said yesterday. Washington has been pushing governments around to world to squeeze out Huawei, saying that the telecom giant would hand data to Beijing for espionage. From Monday last week, new curbs have barred US companies from supplying or servicing Huawei. This week, the state-backed China Securities Journal reported that Intel had received permission to supply Huawei. China’s Semiconductor Manufacturing International Corp (SMIC, 中芯國際), which uses US-origin equipment to make chips for Huawei and other companies, last week confirmed that it had sought
Swancor Renewable Energy Co (上緯新能源) yesterday announced plans for a 4.4 gigawatt (GW) offshore wind project off Miaoli County as part of its commitment toward Taiwan’s energy transformation, the company said in a statement. The “Formosa 4” project includes three deep-water wind farms 18km to 20km off the coast, Swancor Renewable CEO Lucas Lin (林雍堯) said, adding that planning for the project began last year. A proposal for Formosa 4 was this week submitted to the Environmental Protection Agency (EPA), the company said. Swancor Renewable jointly developed the Formosa 1 project, a 128 megawatt (MW) wind farm about 4km off Miaoli and the
INVEST IN TAIWAN: A metal components casting firm and the world’s largest maker of aluminum bicycle rims also obtained approvals to join the program Solar Applied Materials Technology Co (SOLAR, 光洋應用材料), a part of Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) “green supply chain,” has pledged to invest NT$1 billion (US$34.1 million) to build a new plant at the Tainan Technology Industrial Park (台南科技工業區), the Ministry of Economic Affairs said yesterday. SOLAR has been collaborating with TSMC to extract precious metals from waste and reuse them as “sputtering target” material in high-end semiconductor manufacturing, a TSMC press release issued in May said. Established in 1978, SOLAR also offers key materials and integrated services to customers in the optoelectronics, information and communications technology, petrochemicals and consumer electronics industries,