23rd May 2016 11:21
LONDON (Alliance News) - Aquatic Foods Group PLC on Monday reported a fall in revenue in the first quarter of 2016 and warned that challenging market conditions in China are set to continue during the course of the year.
The Chinese marine foods and seafood processor said total revenue in the three months ended March 31 fell to CNY214.8 million from CNY230.6 million in the first quarter of 2015, as the company continues to be hit by pricing and gross margin pressure due to a difficult Chinese economy.
Volumes, however, grew by 17% in the period, which Aquatic Foods said reflected the "continued demand" for its products.
Gross profit in the first quarter declined to CNY52.3 million from CNY72.6 million year-on-year.
By product category, sales of fish fell by 7% despite a 9% rise in volume, which Aquatic Foods said was due to reduced selling prices. Sales of Cephalopods, principally squid and cuttlefish, decreased by 2%, while sales of shrimp and shellfish also fell. Sales of sea cucumbers, however, grew by 4%, although average product prices were still lower year-on-year.
Aquatic Foods warned that it expects the challenging trading environment in China to continue throughout the first half of the year, and that it has increased its marketing and advertising efforts in order to try and mitigate this. It is specifically targeting increased sales to supermarkets.
The company will also review its expansion plans, including building additional processing and cold storage capacity to help with the increase in processing volume.
"The challenging market conditions may continue further into 2016, however we will continue with our commitment to grow the "Zhenhaitang" brand in the PRC and to expand our processing capabilities and distributor network. This will ensure that the company is fully prepared to benefit from future opportunities once the macroeconomic environment improves," Chief Executive Li Xianzhi said in a statement.
"In the meantime, the board believes that through increased promotional and brand awareness activities that our sales within the PRC will improve as well as internationally by attracting new distributors," Xianzhi added.
Shares in Aquatic Foods were trading down 6.3% at 7.50 pence on Monday afternoon.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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