Starch producer China Essence Group said today (14 August) it will slow down on its expansion plans as it posted a 79.6% drop in first-quarter profit.
For the three months ended 30 June, net profit dropped to CNY7.2m (US$1.05m), which CEO Zhao Libin said reflected the “challenging environment” in which it operates.
“The comparison is made even starker, given that the first quarter of our previous financial year was a period of relative calm and growth – before the global recession took on a turn for the worse in September 2008,” Libin said.
The group’s revenue fell by 36.5% to CNY90.9m, while operating profit also decreased, dropping 68.3% to CNY16.1m.
In order to preserve more cash, the group said it will complete the construction of two potato starch production plants in Nenjiang and Zhalantun by 2011 and not 2010, as earlier announced.
Libin said that while there have been indications that the global recessionary climate is beginning to ease, the company believes that the year ahead will remain “challenging”, as consumers still appear to be in “belt-tightening mode”.
“I am confident that we will remain as one of the leading players in the market,” he added.