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Half-year results

Want Want China sees rice cracker sales crumble in H1 due to shorter Lunar New Year

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Douglas Yu

By Douglas Yu+

26-Aug-2017
Last updated on 29-Aug-2017 at 13:07 GMT2017-08-29T13:07:57Z

Want Want is a market leader in China's rice cracker category. Pic: Want Want Holdings
Want Want is a market leader in China's rice cracker category. Pic: Want Want Holdings

The rising cost of raw ingredients and the early arrival of the Chinese New Year in 2017 has taken a toll on Want Want Holdings’ half-year sales, according to the company’s latest financial results filed with The Stock Exchange of Hong Kong.

The company reported a total revenue of RMB 9,347.4 million ($1.4bn) during the period, decreasing by 3.7% year-over-year.

Declining rice crackers and gift pack revenues

“The impact due to the shorter period of sales leading the Chinese New Year in 2017 by 11 days was the most obvious,” said Want Want. “Revenue of rice crackers amounted to RMB 1,953.1m ($293.78m), representing a decrease of 5.7%.”

However, the company noted the performance of overseas markets was positive with high-single digit growth, resulting in the better overall performance of rice crackers.

“This shows that rice crackers have always maintained the momentum for healthy growth and its solid market leading position,” it said.

Similar to the crackers segment whose sales rely heavily on the Chinese New Year, revenue of Want Want’s gift packs recorded a year-on-year decrease of 29.1%.

Meanwhile, it said it would continue to strengthen its “multi-brand strategy” and enhance the utilization rate of its production lines by introducing sub-brand rice crackers such as Yappy in certain regions to keep seizing market share.

“With the implementation of the multi-brand strategy, revenue of the sub-brand rice crackers still recorded a year-on-year increase of 20.5%,” the company said.

Change of financial year-end date

Want Want said, as the date of the Chinese New Year changes every year, “having a financial year end of December 31 means the number of days of the peak sales period (approximately 90 days leading up the holiday) on which sales are recognized for each financial year may vary materially,” affecting the company’s actual underlying performance.

As a result, the board of Want Want decided to change the financial year-end date from December 31 to March 31, starting next year.

Snack foods portfolio

In addition to rice crackers, Want Want also produces dairy and beverage products, as well as other types of snack foods, including candies, popsicles, jellies, ball cakes, nuts and beans.

The snack foods segment, excluding rice crackers and gift packs, posted a total revenue of RMB 2,839.8m ($427.15m) in the first half of 2017, slightly decreasing by 3.5% versus a year ago. The declining sales were partially caused by “counterfeit issues” for certain products, it said.

The company said it cooperated with relevant law enforcement in 2016 to combat counterfeit ball cakes, and the performance of the products had gradually recovered during the period.

In the second half of 2017, Want Want is expecting to further invest in channel development and grow overseas markets with suitable products.

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