March 23, 2015 / 5:55 AM / 5 years ago

UPDATE 1-China food giant Tingyi's sales and profit skid on slowdown, competition

* Tingyi 2014 net profit down 2 pct, trails forecasts

* Annual sales fall for first time since 1998

* Competition in market “intense” - Chairman

* Analysts eye boost in 2015 from lower input prices (Adds chairman’s comment, earnings details, context)

By Adam Jourdan

SHANGHAI, March 23 (Reuters) - China’s largest food and beverage maker, Tingyi Holding Corp, said net profit slid 2 percent in 2014, falling well below estimates, as a slowing economy and fierce competition dragged sales down for the first time in almost two decades.

Hong Kong-listed Tingyi, owner of the Master Kong brand and a partner with PepsiCo Inc and Starbucks Corp in China, said on Monday profit for the year fell to $400.5 million from $408.5 million a year earlier.

The result lagged far behind an average forecast of $445.7 million compiled from around 30 analysts polled by Reuters.

Tingyi’s chairman Wei Ing-Chou said in an earnings filing that market competition had been “intense” in 2014. The firm said in the filing it would focus on cost-cutting this year, with plans to reduce staff numbers in some segments and to look to mobile channels to boost sales.

“In 2015, the overall operation strategy of the group will switch to cost saving, efficiency enhancing, and innovation as a result of the sluggish economy and the nature of the consumer market,” the company’s chairman said.

Tingyi said total revenue was $10.2 billion for the year, down from $10.9 billion a year earlier, the first sales drop since 1998. The number was squeezed by a 4.5 percent drop in instant noodle sales, which accounted for 40.4 percent of revenue, and a 7.5 percent drop in beverage sales, contributing 56.7 percent of revenue.

Analysts have said lower materials prices and Tingyi’s advantage of scale over rivals - it commanded around a third of China’s noodle market last year, according to Euromonitor - could help it soak up slowing domestic economic growth in 2015.

The firm competes with Uni-President China Holdings Ltd and Want Want China Holdings Ltd, which announced an almost 10 percent drop in full-year net profit last week.

Shares of Tingyi were down 1.95 percent at around 1345 in Shanghai (0545 GMT) on Monday, but have risen 2.4 percent so far this year. The benchmark Hang Seng Index is up 3.8 percent over the same period. (Editing by Kenneth Maxwell)

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