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Tingyi sees higher rural needs

TINGYI Holding Corp, which produces instant noodles, beverages and bakery under the Master Kong brand, reported a 29-percent growth in net profit last year and it expects the economic downturn to have a limited impact on the food and beverage industry this year because of higher demand from rural areas.

Its net earnings rose to US$362 million in 2008, compared with US$280 million in 2007, Tingyi said in a statement to the Hong Kong stock exchange yesterday. The group's turnover was US$4.3 billion, an increase of 32.86 percent from a year earlier.

Because of the global financial crisis and slumping exports, China's gross domestic product expanded at a seven-year low of 9.0 percent last year, prompting consumers to rein in expenditure amid uncertainties over jobs and a slowing economy.

Tingyi estimated consumer demand will continue to decline in the slowdown this year but the fast food consumer industry is unlikely to be hit severely after the central government launched stimulus measures.

Rural areas

"Due to the decrease in income and expected income, the proportion of high and medium end consumer goods in the overall urban household food consumption will decline and the proportion of basic consumer goods will increase," it said in the statement. "On the other hand, with rural household income rising in recent years, the rise in food consumption in rural areas will be higher than that in urban areas."

Tingyi said it plans to adjust its product mix to meet market demand while boosting its dominant products in order to achieve double digit growth in turnover and earnings this year.

Last year, most of Yingyi's sales revenue was contributed by the noodle business, which jumped 40 percent to US$2.1 billion last year. Beverage sales saw a 26.7-percent sales growth and bakery sales grew 36 percent.

According to ACNielsen, Tingyi raised its share in China's instant noodle market to 50 percent last year, followed by Hualong and Baixiang, two domestic brands.


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