27 May 2008 - Potato starch producer China Essence Group Ltd. has announced that its revenue increased 65% over FY2007, from RMB 521.2 million to RMB 858.8 million, on the back of higher sales volumes.
Meanwhile, the firm's gross profit grew 52% over FY2007 to reach RMB 382.9 million, driven by robust demand for potato starch and higher average selling prices.
Indeed, sales of potato starch products increased by 158% over FY2007, from RMB 211.8 million to RMB 547.4 million. It accounted for 63.7% of the Group’s revenue in FY 2008, up from 40.6% in FY2007.
"Volume and price of potato starch were key growth drivers for FY2008. Rising procurement orders from new and existing distributors drove volume while ASP grew about 33.8% over FY2007, mirroring the strong domestic demand for potato starch. Underpinning the demand is the anti-dumping regulations on potato starch manufactures from the European Union, which has been in force since February 2007", the company said in a statement.
Mr Zhao Libin, Chairman and CEO of China Essence said, “We are pleased to deliver a set of outstanding results for FY2008. We have successfully planned and delivered on our expansion plans
for FY2008, thus contributing to our good performance for the year.”
“As demand for potato starch, modified starch and potato starch-based products continues to grow, we are pleased to announce fresh plans to strategically expand our operations to meet with this
demand. We are also moving towards being a truly integrated potato-processing producer, with our suite of primary, downstream and by products.”
Regarding future business, China Essence said that it is optimistic of its performance in FY2009, as it expects order momentum to remain strong for its core products such as potato starch, on the back of increased market penetration and a growing distributor network.
2 New Potato Starch Plants
To consolidate its position as a leading potato starch manufacturer in the PRC, China Essence intends to acquire two pieces of land in Fu Yu, Heilongjiang and Zhalantun, Inner Mongolia, to build new plants for potato starch production.
The new facilities are expected to be operational in 2Q FY2010, will increase the Group’s annual production capacity for potato starch from 180,000 t.p.a. to 260,000 t.p.a.
With these new facilities, China Essence will have 5 production plants spread across Northeast China – Daqing, Sui Ling, Fu Yu in Heilongjiang, and Ahlihe and Zhalantun in Inner Mongolia.
Meanwhile, the company is also building potato protein and fibre production lines at its Sui Ling plant. The facility has a current capacity of 8,000 t.p.a. of potato protein and 80,000 t.p.a of potato fibre and is expected to begin large-scale production in 3Q FY2009 upon arrival of the coming potato harvest season.
In addition, the Group eventually plans to double the annual production capacities of potato protein and fibre to reach a total of 16,000 tonnes for potato protein and 160,000 tonnes of potato fibre by September 2009 (2QFY2010). Installation of machinery for these additional capacities will take place from September 2008 through August 2009, in time for the following harvest season, August to November 2009. These additional capacities will be spread over the existing potato starch facilities in Daqing, Heilongjiang and Ahlihe, Inner Mongolia.