Noodle business sees tough year

PUBLISHED : Tuesday, 22 March, 2016, 6:48pm
UPDATED : Tuesday, 22 March, 2016, 7:24pm

The noodle business in China experienced tough times last year, with two leading companies in the trade reporting double digit profit declines.

Tingyi, the maker of the popular Master Kong instant noodle brand, reported its net profit last year fell 36 per cent to US$256 million from US$400 million in 2014.

The company attributed the slump to a drop off in noodle sales amid the “new normal” being experienced by the Chinese economy and retailers taking a wait-and-see approach to a price increase,

Tingyi chairman Wei Ing-chou said in a result announcement on Tuesday.

Annual turnover dropped 11.09 per cent to US$9.1 billion last year, while gross profit was down 6.99 per cent to US$2.9 billion.

Turnover from instant noodles fell 12.7 per cent year on year to US$3.6 billion in 2015, while beverage sales posted a 9.6 per cent decline to US$5.24 billion for the same period.

Wei said Shanghai Disneyland would be a boost to its business when it opens in June this year. “As its strategic partner [Master Kong] will continue to plan unique and influential marketing activities and we expect Chinese tea culture will be witnessed by customers from all over the world in Shanghai Disneyland and promoted internationally,” he said.

In 2016, Wei said the company would continue to adopt productive and innovative initiatives, invest more resources in the group, and strengthen channel innovation.

Separately, noodle retailer Ajisen China reported that its net profit last year fell 17.7 per cent to
HK$226.9 million, while gross profit declined 5 per cent to HK$2.18 billion.

Ajisen China chairman Poon Wai said he was optimistic about prospects for the takeaway noodle business, adding that stores operating a takeaway business would expand from 300 to 500 by the end of 2016.

In response to market trends in the industry, Wai said Ajisen China last year stepped up its efforts to promote takeaway services in restaurants across the country. It also invested in some key raw materials.

“We invested in an egg supplier and became its shareholder for the purpose of ensuring the quality of upstream raw materials for the industry and in order to reduce costs,” he added.