Tingyi (Cayman Islands) Holdings, the mainland's largest packaged food and beverage maker, said its turnover surged by 32.83 percent to $1.32 billion in the third quarter for the three months ended Sept 30.

"Negative interest rate and inflation pressure led to reduced consumer spending and increased proportion of expenditure on daily necessities. The company's turnover increased by 32.83 percent over the same period last year to $1.32 billion," the statement said.

The main drivers for the increase were instant noodles, beverage and bakery businesses and the sales increased by 32.88 percent, 34.02 percent and 35.36 percent from last year to $542 million, $704 million and $46 million, respectively.

Though the prices of palm oil, a key ingredient in instant noodles, had come down considerably in August, it remained quite high in the third quarter. As a result, this dragged down the gross margin by 0.39 percentage points to 26.11 percent.

Tingyi's gross profits, however, grew 30.93 percent and net profits increased to $49.67 million, thanks to effective marketing strategy and cost control measures.

"During the period, the company continued to use the strategy of marketing Master Kong brand as high-end noodles to maintain the existing market share of high-end noodles and at the same time capture the middle and lower-end markets with its improved Fumanduo brand," the statement said.

In beverage business, sales growth witnessed a slowdown in the third quarter due to inflation and a drop in consumer income on the mainland.

The snackmaker's gross margin for beverage dropped by 1.18 percentage points to 36.67 percent and its gross profits grew by 29.85 percent to $258.03 million from a year earlier. Its net profits from beverage business increased to $37.91 million.

On the other hand, the turnover of the bakery business in the period totaled $45.53 million, representing an increase of 35.36 percent from last year, thanks to the establishment of an efficient marketing team and sales management.

The company's gross margin for bakery business dropped by 0.49 percent points to 38.39 percent but net profits increased to $3.67 million.

Looking forward, the company expects the food industry to maintain steady growth amid global slowdown due to the central government's effective fiscal measures.

"The mainland's measures to boost domestic consumption provide favorable opportunities for Master Kong to develop its business," the statement said.

"Master Kong will continue to leverage on its own advantages for the on-going development of its instant noodles, beverage and bakery businesses," the statement said.

(HK Edition 11/25/2008 page2)