Sat, Sep 08, 2018 - Page 12 News List

Wei Chuan sees losses narrow as it branches out

By Ted Chen  /  Staff reporter

Wei Chuan Foods Corp chief executive officer Michael Su poses for a picture at an investors’ conference in Taipei yesterday.

Photo: CNA

Foodmaker Wei Chuan Foods Corp (味全食品) yesterday reported that losses at its core businesses had narrowed in the first half of the year, driven by a turnaround in its operations in Taiwan and China.

Net income in the first half rose 26 percent annually to NT$6.21 million (US$201,781), with sales gaining 11.6 percent to NT$8.83 billion. Earnings per share were NT$0.12.

Wei Chuan posted an aggregate operating income of NT$125 million to the end of June, up from NT$77 million in the red a year earlier, while operating margin jumped to 1.42 percent from minus-0.97 percent a year earlier.

Over the period, gross income rose 19.2 percent to NT$2.67 billion, with gross margin increasing by 1.9 percentage points to 30.2 percent.

However, the company saw foreign-exchange losses last quarter as a weaker New Taiwan dollar led to a spike in interest payments on its US-dollar-denominated loans, leading to a net loss of NT$54.81 million after five consecutive quarters of profit.

The company would continue to improve its capital structure and revitalize its assets, Wei Chuan spokesperson Chang Mei-huang (張美凰) told an investors’ conference in Taipei.

Chang said that the company has sold its 51 percent stake in Ting Lu Development (頂率開發), a subsidiary of Ting Hsin International Group (頂新集團) — Wei Chuan’s parent company.

Ting Lu was set up to develop a plot of land owned by the foodmaker, Chang said.

Wei Chuan is expected to book NT$880 million in profit from the sale before the end of next month, which is expected to boost earnings per share performance by NT$1.74, Chang said.

The sale would cut Wei Chuan’s annual interest expenses by NT$100 million and reduce its exposure to foreign-exchange volatility, Chang said.

The company has been diversifying into juices, bottled coffee, yogurt beverages and functional beverages containing lactic acid bacteria to cut reliance on milk products, which in the past made up 70 to 80 percent of annual sales, Wei Chuan chief executive officer Michael Su (蘇守斌) said.

The company has a 22.9 percent share of the wholesale milk market, as well as 11.3 percent in drinking yogurt, 33 percent in bottled juice and 39.1 percent in bottled coffee, Su said.

The company would continue to expand milk production in China to tap into contract manufacturing and supply partnerships with global brands, Su said.

At the end of June, sales in China made up 56 percent of the total, exceeding sales in Taiwan for the first time, company data showed.

China logged sales growth of 17.4 percent at the end of June, compared with a 6.9 percent increase in Taiwan, data showed.

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