17 Sept - Global Sweeteners Holdings Ltd (GS) has announced proposals to increase its market share overseas and revealed it wants to break into the retail sector with the launch of its own brand sweetener.
The Chinese company made the revelations as it posted a 41.7% increase in net profits in its 1H 2008 results. However, despite this headline figure, the individual divisions in Global Sweetener enjoyed mixed success in the half year.
Global Sweeteners’ products are divided into three main categories:
* corn syrup (glucose syrup, maltose syrup and high fructose corn syrup (HFCS)),
* corn syrup solid (crystallised glucose and maltodextrin)
* sugar alcohol (sorbitol).
GS said its net profit for the six months ending 30 June 2008 reached HK$141, while its consolidated revenues were HK$810 – increases of 41.7% and 11.3% respectively.
Gross profit for the company increased by 20.6% during the period thanks in large part to increased sales of four products; maltodextrin, HFCS, sorbitol and crystallised glucose.
The company said it managed to offset an 8% price rise in corn starch – its major raw material – by increasing prices to customers and through the utilisation rate of its crystallised glucose and sorbitol plants.
However, the company admitted it has faced challenges due to extra demands placed on its crystallised glucose and sorbitol plants. Operational reasons meant the company’s internal consumption of glucose syrup soared by 136.6% to 168,000 mt.
Consequently, the external sales of glucose syrup fell by 45% to 116,000 mt, leading to a 37.1% drop in revenues from this income stream. Also, sales of maltose syrup fell to 73,000 mt, a drop of almost a third in volume, leading to a revenue decline of almost 10%, said the company.
Despite this, GS said its gross profit margin from glucose syrup increased by over 2.5% to 22% - thanks to rising prices on the open market.
But two other areas experienced a drop in their gross profit margins.
1) gross profit margins for maltose syrup fell 4% year-on-year to 20% due to “intense competition in the market".
2) Gross profit margin from HFCS, a sugar cane substitute, dropped by a third from 22% to 14% - due weak Chinese sugar prices.
Revenues from corn syrup rose by almost 150% year-on-year although no figure was given, while revenue from maltodextrin and crystallised glucose increased by approximately 56.6 per cent and 217.8 per cent respectively to approximately HK$81 million and HK$222 million.
GS also revealed that it had resumed sorbitol production thanks to a rebound in the market, Revenue in 1H 2008 rose to HK$46 million after production had increased to 15,000 mt (compared to HK$2 million and 1,000 mt in 2007.
The company also unveiled plans to expand its overseas markets – initially targeting neighbours Korea and Japan where demand is strong but supply weak. A company statement said it wanted “to maintain a more balanced and diversified source of income and further enlarge its sales”.
To explore overseas market, the Group has started to export its maltose and maltoextrin products to overseas countries such as the Philippines, Korea, Singapore and Turkey since February 2008. Total export sales value and volume of the Group during the period under review amounted to approximately HK$32 million and 10,000 metric tonnes, respectively.
The company also revealed it plans to break into the retail sector and is developing a range of sweetener products for this market. A sales office dedicated to this has been established in Shanghai.
The company also listed a number of projects to boost product output:
* To enhance its production capacity of corn sweeteners, the Group is currently constructing a new glucose production facility of 200,000 mtpa in Jinzhou. Commercial production of the facility is expected to commence in the fourth quarter of this year.
* The domestic sugar alcohol market showed strong performance during the period. To cope with the demand growth in the sorbitol market, the Group plans to add a new production line with capacity of 40,000 mtpa in its Changchun sorbitol plant. Construction of this project will commence in the second half of the year. The project is expected to complete and commence production in the first quarter of 2009.
* GS also plans to add a maltodextrin production line in Changchun of 30,000 mtpa in the first quarter of 2009. Commercial production of this new maltodextrin facility is expected to commence in the fourth quarter of 2009. Upon completion, the Group’s total maltodextrin production capacity will reach 50,000 metric tonnes.
* Regarding the crystallised glucose plant in Jinzhou with 100,000 mtpa capacity, construction will commence in the second quarter of 2009. It is expected to be completed and commence trial run in 2010. Following the completion of the aforementioned projects, the Group’s sweeteners production capacity will be increased to 1.39 million mtpa.
Regarding the Group’s future development, Mr. Kong Zhanpeng, Chairman of Global Sweeteners, said, “Our mission is to become one of the largest corn sweetener manufacturers in Asia and a major player in the global market. To realise this objective, the Group will strive to enlarge its market share and diversify its product mix, as well as to enhance its capacity in developing high value-added products and new applications through in-house research and development and through strategic business alliances with prominent international market leaders.”
“As one of the largest corn sweeteners producers in the PRC in terms of production capacity and production output, we believe that it is of utmost importance for the Group to maintain its leading market position by expanding its production capacity and expanding its sales network,” added Mr. Kong.