HONG KONG: Tingyi (Cayman Islands) Holding Corp, China's largest packaged food maker, voiced optimism about its full-year results after posting its best ever quarterly net earnings.

"The outlook for our business (for the full year) should be optimistic as long as crude oil prices stay within the range of $50-60 per barrel," said Chief Financial Officer Frank Lin, who fielded questions from media after the company released its quarterly results yesterday.

Polyethylene terephthalate (PET) resin, a product derived from crude oil, accounts for 60 percent of the total costs of Tingyi's PET bottled drinks.

The company posted a record $92.8 million net profit in the quarter ended March, up 42.5 percent year-on-year, thanks to stronger sales and improved profit margins.

Turnover stood at $1.175 billion, up 21.3 percent from the same period of 2008.

The food maker attributed the stronger sales to its flexible and effective marketing strategy and improved product mix.

Meanwhile, its gross profit margin grew by 2.97 percentage points to 35.37 percent from a year ago while the net profit margin rose 1.17 percentage points to 7.89 percent, due mainly to lower material costs and improved operating efficiency, it said.

However, the company is more cautious about the outlook for full-year profit margins.

"Palm oil and PET resin prices have started to rise in the second quarter, although the current price levels are still much lower than those of last year," said Lin.

Palm oil costs account for 12-15 percent of Tingyi's total costs for noodle production.

Lin denied speculation that Tingyi is interested in acquiring Beijing-based pure juice maker Huiyuan Juice Group Ltd.

Tingyi also has no plans to list its shares in Taiwan, its home market, in any form, he said.

He also allayed concerns over the possibility that Tingyi might try to raise capital by issuing new shares amid the current fund-raising frenzy in the overall market, saying the company actually has problems finding where to spend its $650 million cash assets.

During the first quarter, the company achieved growth in all its divisions.

Turnover for the instant noodle operation, which remains the largest segment of Tingyi, amounted to $587.7 million, increasing by 11.96 percent year-on-year and representing 50 percent of the group's total turnover.

Meanwhile, turnover for the beverage business was $525.2 million, an increase of 36.7 percent year-on-year and representing 44.7 percent of total turnover.

Bakery business posted a turnover of $39.8 million, increasing 17.82 percent year-on-year and represented 3.38 percent of total turnover.

The refrigeration business continued to develop smoothly during the period, the company said, without elaborating.

(HK Edition 05/26/2009 page2)