CFC China Food Co.

TIDMCFC

RNS Number : 3934S

China Food Company PLC

18 November 2011

 
 Press Release   18 November 2011 
 

China Food Company Plc

("China Food" or the "Company")

Trading Update

China Food Company plc (AIM: CFC), a leading Chinese manufacturer of cooking and dipping sauces, today provides a further update on trading.

The Company is pleased to announce that the animal feeds business remains cash-flow positive and continues to perform positively and as at 30 September 2011 was trading up 8.5% year-on-year. As previously announced negotiations are continuing over the future of the feed business and the Company is now in detailed discussions.

In the condiments business, Hao Tai Tai soya sauce continues to trade robustly with sales up 17% year-on-year as at 30 September 2011. The Directors believe there is substantial room for Hao Tai Tai to increase sales further and in so doing, take up to 60% of the targeted new soya sauce production from China Food's new plant for its first year. The condiments business overall has seen an increase in sales of 12% year-on-year as at 30 September 2011.

The Company continues to sign up distributors and now has reached 71 regional distributors for 'Xaka', the Company's premium grade soya sauce. This figure exceeds management's expectations and represents a significant increase over the 34 distributors that the Company had already signed up as announced on 27 October 2011. These are first tier distributors which are now placing orders and complement the existing network of distributors that is already carrying the Company's products. The involvement of so many distributors is extremely encouraging and demonstrates how well the launch of Xaka has been received. This puts China Food in an excellent position going into 2012.

Whilst the rollout of Xaka continues to make good progress, the large uptake of distributors has introduced some short-term timing issues in the run up to the traditionally strong trading quarter prior to the Chinese New Year. Although the Company has commitments from these distributors, the timing issues will mean that anticipated sales will now not be realised in the current financial year and accordingly the Board now expects that the results for the year ending 31 December 2011 will be below market expectations. The Board will have a clearer view on the full impact of the delayed trading of Xaka following its Board meeting in early December 2011 and a further update will be issued at that time.

China Food's core business continues to trade robustly and the Board remains greatly encouraged by the future prospects for growth of the Xaka brand.

- Ends -

For further information:

 
 China Food Company Plc 
 John McLean, Non-Executive Chairman        Tel: +44 (0) 7768 031 
                                                              454 
 Raphael Tham Wai Mun, Chief Executive 
                                         www.chinafoodcompany.com 
 Numis 
 David Poutney - Head of Corporate           Tel: +44 (0) 20 7260 
  Broking                                                    1000 
 
  finnCap (Nomad) 
 Geoff Nash / Ben Thompson (Corporate        Tel: +44 (0) 20 7600 
  Finance)                                                   1658 
 Simon Starr (Broking) 
 

Media enquiries:

 
 Abchurch Communications 
 Henry Harrison-Topham / Joanne Shears     Tel: +44 (0) 20 7398 
  / Mark Dixon                                             7709 
 mark.dixon@abchurch-group.com           www.abchurch-group.com 
 

Notes to Editors:

China Food is a well-established food manufacturing business based in Shandong province in the People's Republic of China, a region with a population of circa 94 million. A recent report identified Shandong province as one of the five most attractive 'city clusters' in China, due to the high number of large cities in the province*. The Group manufactures numerous different product lines including soya sauce and bean paste, all targeting the Chinese domestic market, and sold through a network of distributors and outlets of supermarket chains in the north-eastern region of the PRC, such as Tesco, Walmart, Carrefour and Jialejia.

The Chinese sauces, dressings and condiments market is expected to be worth CNY115 billion (US$15 billion) by 2013**, driven by Chinese population growth and economic prosperity. The Chinese domestic market is rapidly expanding, and the Group is well positioned to benefit from China's demographic growth and increased urbanisation.

The first phase of expansion is now complete at the Group's new factory, which was officially opened on 12 May 2010, and this doubles China Food's current capacity. It is proposed that in due course there will be a further two phases, adding capacity of 100,000 tonnes through the building of 230 additional silos. The Group plans to expand into the neighbouring provinces such as Henan and Hebei.

The Group also operates an animal feed business, Fuss Feed. This business produces premix, concentrate and compound feedstuffs, and is the third largest animal feed business in Shandong, an important province for the production of livestock in China.

The Group's operations are highly scalable and able to support further growth, and with net assets of GBP37.8 million (as at 30 June 2011), the prospects for China Food are strong. Further information on China Food Company can be found at www.chinafoodcompany.com.

*McKinsey Quarterly Report: Is your emerging market strategy local enough?, April 2011

**Source: Datamonitor report: Sauces, Dressings and Condiments in China to 2013, April 2010

This information is provided by RNS

The company news service from the London Stock Exchange

END

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