Huiyuan Juice profits from new products

PUBLISHED : Wednesday, 23 March, 2011, 12:00am
UPDATED : Wednesday, 23 March, 2011, 12:00am

China Huiyuan Juice Group, the biggest juice producer on the mainland, bounced back to the black last year after it diversified its product range and increased market share.

The company said net profit was 181.03 million yuan (HK$215.46 million), against a loss of 99.75 million yuan in 2009. Overall revenue rose 30.9 per cent to 3.71 billion yuan.

The biggest sales growth was in its non-core drinks segment, where revenue jumped 114.2 per cent to 310.8 million yuan, mainly fuelled by surging demand for water, bottled tea and milk-based drinks such as yogurt.

Sales of the group's core juice products, including 100 per cent juices, nectars and juice drinks, increased 26.4 per cent to 3.4 billion yuan. Nectar sales continued to be the main revenue driver, accounting for 39.6 per cent of total revenue.

Chairman Zhu Xinli said there was substantial room for growth in juice beverage consumption - the current annual per capita consumption of juice is less than 1 kilogram, or 10 per cent of the global average.

Overall sales of fruit and vegetable juices on the mainland reached 3.5 billion litres last year, up 12.4 per cent from 2009, according to data from research company Nielsen.

The group attracted a HK$19.65 billion takeover bid from Coca-Cola in 2009, which Beijing ultimately opposed.

Zhu also said the company would continue to develop new products in both juice and non-juice drink products. However, the group only earmarked 400 million yuan to 500 million yuan for capital spending this year.

This was a far cry from last year, when it spent 2.14 billion yuan on the purchase of property, plants and equipment, and 203.7 million yuan on the acquisition of land-use rights.

Zhu said the group had significantly expanded its sales and production base across the mainland. It now boasts 40 factories, five of which started operating last year, and a production capacity of 4.5 million tonnes.

The gearing ratio for this year is expected to be about 40 per cent, down from 58.4 per cent previously, because of lower capital expenditure.

Gross profit increased 33.4 per cent to 1.36 billion yuan.

Gross profit margin improved from 36 per cent to 36.7 per cent after the prices of products were raised by 8 per cent to offset rising production costs.

Huiyuan shares yesterday rose 3.2 per cent to close at HK$5.48.

Sweet returns

After reporting a loss in 2009, China Huiyuan Juice Group returned to the black last year with earnings of, in yuan: 181m yuan