(Corrects to say gross margin increased, not declined, in paragraph 4)
HONG KONG, March 25 (Reuters) - Tingyi (Cayman Islands) Holding Corp, a Chinese partner of Starbucks and PepsiCo, on Monday reported a 35.4 percent rise in annual net profit, as it upgraded and modified its product mix.
The owner of the Master Kong brand said its profit for the January-December period rose to a record 2.46 billion yuan ($366.60 million) from a 1.82 billion yuan a year earlier. That compared with an average forecast of 2.47 billion yuan profit by 24 analysts, according to estimates compiled by Refinitiv.
Revenue increased 2.9 percent to a record 60.69 billion yuan during the year from 58.95 billion yuan a year ago and compared with analysts’ forecast of 61.02 billion yuan.
Gross margin increased 1.45 percentage points from a year earlier to 30.86 percent.
The company is facing challenges including changing consumer behaviours, rising raw material costs, and fragmenting sales channels amid rapid e-commerce growth.
China’s food and beverages industry has also been pressured by slowing global growth and trade conflict between Washington and Beijing.
“There are many uncertainties in the macro environment in 2019, and China’s food and beverage industry also feels the pinch of a slowdown in growth,” Tingyi Chairman Wei Ing-Chou said in an exchange filing.
“It is expected that in 2019, the instant noodle business will develop steadily, and the beverage business will gradually stabilize and settle for cautious optimism,” Wei said, adding that consumption upgrade will buoy the industry.
Shares of Tingyi, which fell 31.2 percent in 2018, were up 7.6 percent so far this year. The stocks lost 2.6 percent on Monday before the company announced its results. ($1 = 6.7103 Chinese yuan) (Reporting by Donny Kwok; Editing by shreejay Sinha)