Shares in China’s largest instant noodle maker, Tingyi, dropped sharply on Tuesday morning after the company announced that its first quarter net profit fell 60% year-on-year to US$8.89m due to higher raw material costs.

Tingyi said sales in the second quarter were likely to be impacted indirectly by the outbreak of the SARS virus due to decreased consumer spending, reported Reuters.

Sales of Tingyi’s instant noodles rose 9.05% to US$177.73m in the first quarter, accounting for 61% of group turnover.

The company said gross margin for instant noodles fell by 6.65% to 22.05% in the first quarter due to a 20% increase in the price of palm oil, an important manufacturing element.