Chinese food and beverage manufactuer Tingyi said that profit rose during the first quarter but its gross margin was squeezed due to rising raw material costs.
The company announced today (13 May) that profit was up 17.9% to US$167.5m for the quarter ended 31 March.
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“During the period, prices of raw materials increased sharply, resulting in squeezed margins,” chairman Wei Ing-Chou said.
The group’s gross margin fell 3.68 percentage points to 26.67% during the quarter, compared to 30.35% a year earlier.
Sales, meanwhile, rose some 30.3% over the quarter to reach $2.03bn.
In its instant noodle business, the company said that the total cost of raw materials surged by 17%, with palm oil and flour increasing by 46% and 23% respectively. The division reported a 29.6% increase in turnover to $928.7m.
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By GlobalData“Being confronted with continued inflationary pressure, the group will control production and distribution costs by continuously optimising the operating system and refining the production technology and increase the cost effectiveness by improving the internal operating efficiency,” said Ing-Chou.
