22 April, 2008 – Global Sweeteners yesterday revealed it was considering entering into mergers in order to obtain a corn refinery plant to ensure supply of its raw materials. The company also said it had plans for further collaboration with partner Cargill in high fructose corn syrup production.
The Hong Kong-based firm announced it had a number of new plants in the pipeline as it bids to almost double its production capacity by the end of 2009.
Global Sweeteners Chairman Kong Zhanpeng declared the firm’s ambition to see aggregate production leap from just over one million metric tonnes (mt) at the end of last year to almost two million mt by the close of next year.
He said: “The Group is considering the feasibility of obtaining an upstream corn refinery through merger and acquisition, in order to secure its raw material supply. The Group also plans to raise its aggregate capacity to 1,960,000 metric tonnes by 2009. As at the end of 2007, the aggregate production capacity of the Group amounted to 1,020,000 metric tonnes.
“Apart from this, the Group is in discussion with Cargill Inc. for further collaboration and working more closely together in the area of HFCS business.”
The Global Sweetener chief signalled the firm’s intent after being subject to raw material price hikes during the year of up to 20%.
The revelations came as iGlobal Sweeteners published its annual results, reporting a 23.6% increase in profits for year ending 31 December 2007.
The company, part of the same group as Global Bio-chem Technology, claims to be one of the largest corn sweetener produces in China. It announced yesterday that its consolidated revenue jumped almost 40% year-on-year to HK$1,595 million, while its gross profit increased by a third to HK$335 million.
The company said it was the fourth consecutive year of profits and described the results as “satisfactory”.
While the price of one of its major raw materials had risen 20% during the year, the firm said it had “managed to successfully pass on most of the increased cost to its customers”.
Product Performance
The company’s products can be divided into three categories; corn syrup (glucose syrup, maltose syrup & high fructose corn syrup (HFCS)), corn syrup solid (crystallised glucose and maltodextrin) and sugar alcohol (sorbitol).
In its corn syrup segment, the revenue of all liquid products – glucose syrup, maltose syrup and HFCS – grew by 8.7%, 30% and 12.4% respectively.
A Global Sweeteners statement said: “As a result, the revenue of the corn syrup category increased by 16.1 per cent to HK$1,228 million. Gross profit of the corn syrup series amounted to HK$274 million during the year (glucose syrup: HK$154 million, maltose syrup: HK$98 million, HFCS: HK$22 million).”
The company posted more good news as it said: “The revenue of maltodextrin and crystallised glucose of approximately HK$133 million and HK$223 million respectively increased by approximately 155.8% and 961.9% respectively, due to stronger selling prices and higher sales volume.
“The gross profit of maltodextrin increased by approximately 228.8 % to approximately HK$23 million, while crystallised glucose reported a gross profit of approximately HK$38 million (2006: gross loss HK$2 million).
Sorbitol
However, the performance of sorbitol was poor due to low prices, low utilisation rates and high overheads, which saw gross profit shrink to just HK$0.3 million.
But the company said that as the sorbitol price had now recovered it was optimistic the product could make a profit in 2008.
Based on this confidence and as reported in FLEXNEWS, Global Sweetener acquired in January 2008, the remaining interest in a sorbitol processing plant - after buying out the Mitsui Group from the venture – for US$2.45 million.
New Production Facilities
The company announced that it had plans or was considering the construction of a number of new facilities.
A new glucose production facility of 200,000 mt/pa is currently under construction in the Chinese province of Jinzhou. The group said commercial production is due to start in 2H 2008.
Work on a crystallised glucose production plant with a production capacity of 100,000mt/pa, also in Jinzhou, is also due to start in the second half of 2008, with commercial output likely to begin in 1H 2009.
In Changchun, the second phase of a crystallised glucose facility is scheduled to start later this year.
