Huiyuan Juice turns to new ventures
Updated: 2009-04-16 07:09
By Joey Kwok(HK Edition)
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HONG KONG: China Huiyuan Juice Group, the largest producer of pure juice and fruit nectars on the mainland, said more companies are showing interest in entering into cooperation after Huiyuan's deal with US soft-drink behemoth Coca-Cola was quashed last month.
"There are quite a lot of requests at the moment, however we have not made any decisions yet," Chairman and President Zhu Xinli said in a press conference in Hong Kong yesterday.
Zhu said his corporate colleagues and the company's shareholders were very proud and honored that Coca-Cola proposed a buyout to take over Huiyuan, which is a locally-established private enterprise.
In September last year, Coca-Cola offered HK$12.20 per share in cash to acquire Huiyuan. The $2.4 billion bid, however, was blocked in March by the central government, which ruled the deal would breach the mainland's anti-monopoly law.
The failure of the deal has enhanced Huiyuan's reputation, Zhu said. The company remains open to new cooperative ventures in the market.
Net earnings of Huiyuan tumbled 86.1 percent to 88.9 million yuan in 2008, severely weighed down by the fair-value drop in the conversion right of the company's convertible bonds.
The juice maker's revenue for the twelve months ended December 31 last year jumped 6.2 percent to 2.82 billion yuan. Gross profit in 2008, however, dropped 4.2 percent to 908.9 million yuan, with gross margin sliding to 32.2 percent from 35.7 percent in 2007. Operational profit also slumped 36.8 percent to 215.4 million yuan.
Chief Financial Officer Francis Ng said the surge in raw materials prices took a toll on the company's gross margin, but the company will further improve its margin by adjusting the price of its products and adopting a stricter cost control.
Huiyuan announced in June 2008 that it will spend around 145 million yuan in the acquisition of nine sales networks in eight mainland cities. Ng said the acquisition was delayed due to the proposed buyout by Coca-Cola.
"We hope the acquisitions can be accomplished by June this year," Ng said.
Capital expenditure of Huiyuan in 2009 will decline to 200 million yuan, significantly less than the 1.32 billion yuan in 2008.
Ng said the company will not build new production lines until the first half of 2010, while the capital will be applied mainly to maintenance costs and replacement of equipment and machinery.
Sales of Huiyuan's core juice products, comprising pure fruit juice, nectars and juice drinks, soared 6 percent to 2.65 billion yuan. Of that total, sales volume of pure juice and nectars accounted for 42.1 percent and 43.6 percent of the mainland market share respectively, the company said.
Against the 0.57 percent jump in the benchmark Hang Seng Index, shares in Huiyuan dropped 0.2 percent, or HK$0.01, to HK$5.11 yesterday.
(HK Edition 04/16/2009 page16)