Hong-Kong listed firm Global Sweeteners has delivered mixed results for the first half of 2008, but escaped a potential hit from the price hike in corn by passing on costs to the market.
Despite a surge in costs on the back of a near nine per cent leap in price for corn starch - the firm's prime raw material - Global Sweeteners posted a 41.7 per cent increase in net profits for the first half of 2008.
The ambitious Hong-Kong listed company, which pulled in €12m (HK$141m) in six month net profit on the back of €72m (HK$810m) in revenue, said it managed to lift revenue by "raising product selling prices and the utilisation rate of its crystallised glucose and sorbitol plants."
In terms of production, the firm – which currently has an annual sweetener production capacity of one million tons – has a list of production boosts in the pipeline. These include a new glucose production facility and breaking ground on a new maltodextrin facility – measures that aim to bring online sweetener capacity to some 1.39m mtpa.
A leading corn sweetener producer in China, GS divides its products into three key categories: corn syrup (high fructose corn syrup, maltose syrup and glucose syrup), corn syrup solid and sugar alcohol (sorbitol).
And while revenue grew, fed by a rise in sales from HFCS, maltodextrin, sorbitol and crystallised glucose - thanks to lifted volumes and selling price - figures were hit by a surge in internal consumption of glucose syrup that saw its use grow by about 136 per cent to approximately 168,000 tonnes.
"As a result, sales volume of both glucose syrup and maltose syrup dropped by about 45 per cent and 28.9 per cent to 116,000 metric tonnes and 73,000 metric tonnes respectively," reported Global Sweeteners.
Going forward, Mr. Kong Zhanpeng, chairman of Global Sweeteners, said the mission of the company is "to become one of the largest corn sweetener manufacturers in Asia and a major player in the global market."
And to realise its objective the firm will "enhance its capacity in developing high value-added products and new applications through in-house research and development," as well as "through strategic business alliances".
In terms of new revenue streams, the group said it has plans to launch table-top sweetener products to the market, with a sales office set up in Shanghai to develop its retail business.
The global market for sweeteners as additives used by food manufacturers, as opposed to table-top, came in at around $1.83bn (€1.23bn) in 2007, according to recent data from Leatherhead's report 'The food additives market: Global trends and developments'.
Growth for food-use in the market is hardly strident, with data from the report stating the market is growing only slowly in value terms, rising by a small 1.1 per cent in 2007. Future growth will be intimately linked to the growing appeal from food makers for low and no-sugar foods. Leatherhead slates growth in market value at around two per cent until 2010.
The majority of sweeteners used by the food industry is in bulk form, according to Leatherhead, some 680,000 tonnes used globally in 2007, compared to 80,000 tonnes for intense sweeteners.
Moving towards its aim of becoming a leader in the Asian and worldwide markets for corn sweeteners, earlier this year Global Sweeteners Holdings bought out Mitsui's share of their sorbitol joint venture.
Global Sweeteners formed the joint venture for a sorbitol plant in Changchun, China, with Japan's Mitsui February 2004. At the outset it owned 51 per cent to Mitsui's 49 of the company, called Global-Nikken (Hong Kong).
Announced in January this year, GSH said the acquisition for US$2.5m, would help improve efficiency and management flexibility. The plant has the capacity to produce some 60,000 tons of sorbitol per year.