Tue, Aug 30, 2011 - Page 12 News List

Food giant Uni-President reports drop in net profit

By Kevin Chen  /  Staff Reporter

Uni-President Enterprises Corp (統一企業), the nation’s largest food producer, yesterday reported its first-half net profit fell 24.66 percent from a year earlier, as lower investment income pared those from food and beverages sales.

The Tainan-based company, whose President Chain Store Corp (統一超商) and Uni-President China Holdings Ltd (統一企業中國控股) are major earnings drivers, said net profits for the six months ending on June 30 were NT$4.68 billion (US$161.2 million), or NT$1.03 per share, down from NT$6.22 billion, or NT$1.37 per share, a year earlier.

Revenues in the first half totaled NT$25.28 billion, up 10.46 percent from NT$22.89 billion the previous year. Uni-President attributed the growth to increases in sales of dairy products, tea drinks and bakery products, the company’s filing to the Taiwan Stock Exchange showed.

Uni-President’s first-half net profit included a NT$4.7 billion profit from non-core business investments, including NT$3.89 billion from long-term equity investments and a net NT$83.65 million in divestment gains.

In comparison, the company made a NT$6.12 billion profit from non-core business investments a year earlier, including NT$5.1 billion from long-term equity investments and NT$219 million in divestment gains.

Excluding the contribution of non-core businesses, Uni-President’s operating profit was NT$1.03 billion in the first six months, an increase of 25.01 percent from the same period a year earlier. Gross margin dropped from 23.57 percent a year ago to 23.17 percent because of higher prices of raw materials, such as corn, wheat and soybeans, the filing showed.

Uni-President’s increasing focus on China, compared with its saturated home market, as well as the improving performances of its subsidiaries in Southeast Asia, including Thailand, Indonesia, Vietnam and the Philippines, helped push the company’s second-quarter net profit to NT$2.41 billion in the April-to-June period, up 5.89 percent from NT$2.27 billion in the first quarter.

However, quarterly profits were down 22.94 percent from NT$3.13 billion a year ago because of the higher prices of raw materials.

Quarterly revenues increased 5.36 percent to NT$12.97 billion from NT$12.31 billion in the first quarter and were 7.23 percent higher than the NT$12.1 billion posted last year, company data showed.

Taiwan Ratings Corp (中華信評) said Uni-President is facing pressure on its margins from high material costs and inefficient non-core business investments, as the company diversifies to increase earnings.

However, Taiwan Ratings, the local arm of Standard & Poor’s Ratings Service, affirmed its “twA” long-term and “twA-1” short-term corporate credit ratings for Uni-President, with a positive outlook for the ratings during the next one to two years, according to a statement issued over the weekend.

Uni-President’s share price has fared better than the main bourse so far this year. It has declined 1.5 percent, while the TAIEX fell 15.54 percent.

In yesterday’s trading, Uni-President shares closed at NT$42.6 yesterday, up 3.78 percent, the exchange’s data showed.

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