Want Want China Holdings, the Hong Kong-listed food and beverage group, today (23 August) reported higher first-half profits despite a fall in revenue amid weaker sales of snack foods and from its combined dairy and drinks division.
The company booked revenue of CNY9.71bn (US$1.46bn) for the first six months of 2016, down 12.8% on the corresponding period a year earlier.
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By GlobalDataSnack food sales were down 11.1% at CNY2.94bn. Want Want pointed to wet weather hitting demand for its popsicles. It also said the slowdown in the Chinese economy had led to a rise in the number of counterfeit Want Want products hitting the market and at lower prices.
Sales from Want Want’s combined dairy and drinks division fell 18.5% to CNY4.68bn. Want Want said the overall dairy industry in China was “sluggish”, which led to increased promotional activity. It also said some consumers had been switching to “emerging product sub-categories” such as room-temperature yogurt, which led to a decline in the company’s key dairy category of children’s milk.
Want Want said it plans to study the emerging categories enjoying “rapid growth” in China’s dairy industry and plans to roll out products such as a yogurt drink and yogurts catered especially for children.
The group’s rice crackers division reported sales of CNY2.07bn, up 0.8% on the first half of 2015, with growth dampened by the lower amount of selling days in the run-up to Chinese New Year.
Want Want saw its gross profit dip 1.9% to CNY4.64bn but said its gross margin rose 5.3 points to 47.8% on the back of lower costs of some of its “key raw materials”, including whole milk powder.
Operating profit rose 4.5% at CNY2.38bn, helped by net foreign exchange gains, gains on financial assets and a fall in distribution costs.
Net profit inched up 0.4% at CNY1.76bn, as a fall in finance income and a higher tax bill dampened the growth of Want Want’s bottom line.
