Fufeng Group 0546

Fufeng Group 0546

Postby winston » Mon Jun 23, 2008 9:26 am

Fufeng shifts to Inner Mongolia
KarenWong; Monday, June 23, 2008

Fufeng Group (0546), which manufactures corn-based biochemical products, expects business to improve this year as it moves its production plant to Inner Mongolia following last year's drastic decline in net profit.

"Last year was indeed a very difficult year for the corn refinery industry. Our [monosodium glutamate] and xanthan gum were affected greatly," chairman Li Xuechun said.

As commodity prices continue to surge, Li said the group aims to focus on boosting xanthan gum production.

"Unlike other products, xanthan gum production uses less corn kernel and uses coal," he said. "With 50 percent of our production cost for xanthan gum being in coal, it will significantly help our net profit this year." In MSG and glutamic acid production, corn kernel accounts for 57 percent of costs.

Li said Fufeng's factories in Inner Mongolia will benefit from lower coal costs. "Compared to other regions, coal prices are almost 50 percent less then other provinces."

In 2007, the company reported net profit of 45.1 million yuan (HK$51.2 million), a dramatic drop from 240.5 million yuan the previous year
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