China Minzhong's Q2 profit drops 60%

CHINA Minzhong Food Corporation's earnings fell by 60 per cent in the second quarter as it took a hit from foreign exchange loss and an impairment in receivables.

The group recorded a net profit of 29.1 million yuan (S$6.2 million) for the three months ended Dec 3, down from 72 million yuan a year ago.

Revenue dipped 2 per cent to 523.5 million yuan, as a drop in sales in its cultivation business and branded business is only partially offset by an increase in sales from the processed business segment.

China Minzhong's other expenses ballooned from 16 million yuan in the second quarter last year to 66.7 million yuan, as it made exchange loss of 31.2 million yuan, versus a gain of 9.8 million yuan last year, and also wrote off 9.8 million yuan worth in receivables.

The cultivation and processed business segments will continue to face challenges ahead in view of the shortage of rural labour for cultivation activities and rising costs, said China Minzhong. It, however, noted that the Chinese government continues to strongly support and favour the agriculture industry, particularly the use of agriculture technology to increase food security.

The stock closed unchanged at 81.5 Singapore cents on Friday, before the results announcement.