United Food Holdings 1Q 2007 released result on 30th April 2007, worst is not over

Net profit in 1Q 2007 tumbled by nearly 50% compared to same quarter last year to 29.5 million RMB. However, this is an improvement of nearly 12% over 4Q 2006.

Performance for all segments, except Soybean Processing, deteriorated as compared to same quarter last year or the previous quarter. Health-care supplement did the worst by going into the red. This segment faces stiff competition, rising cost from raw materials and additional cost due to stringent quality control, inspection and testing imposed by US pharmaceutical companies. The inability to fight its competitors and inability to pass on the rising cost to its clients destined this segment for even poorer performance ahead unless there is a genuine viable strategy to turn this segment around.

The only star amongst the various segments is the soybean processing business. Though this segment perform better compared to last quarter or the quarter last year, much of it was due to the festive season. There aren't many festive season ahead and hence much remain to be seen whether they can keep up the good performance for the quarters ahead.