August 27, 2018 / 10:36 AM / a year ago

UPDATE 1-Chinese noodle maker Tingyi Q2 profit doubles, sees higher costs ahead

* H1 net profit 1.306 bln yuan vs analyst forecast 1.085 bln yuan

* H1 gross margin rises 2.13 percentage points to 31.23 pct

* Sees challenges from high raw materials prices (Add management quotes, context)

HONG KONG, Aug 27 (Reuters) - Tingyi (Cayman Islands) Holding Corp’s quarterly net profit more than doubled, led by upbeat noodle sales and higher beverage prices, but the Chinese group said rising raw material costs still remained a challenge.

“Under a volatile international environment, the Chinese economy is expected to experience changes amidst stability in the second half of 2018,” Tingyi Chairman Wei Ing-Chou said in a filing with the Hong Kong stock exchange.

“The group still faces a series of challenges such as high prices of some raw materials, variable consumer demand and fragmentation of channels.”

Tingyi, which owns the Master Kong brand of noodles and packaged beverages, said profit rose to 594.4 million yuan ($86.5 million) in the three months ended June, from 266.70 million yuan profit a year earlier.

Revenue grew 11.1 percent to 15.96 billion yuan.

Tingyi, a Chinese partner of Starbucks and PepsiCo , said its gross profit margin rose 2.56 percentage points to 32.71 percent.

“The beverage business will still face the challenge of structural adjustment,” Wei said, adding the company will gradually establish a presence in high-end markets and will upgrade and improve its packaged food and beverage products.

The results followed a 64.3 percent jump in January-to-March profit of 712.1 million yuan and a 5.9 percent growth in revenue.

Tingyi’s first-half profit surged 86.6 percent to 1.31 billion yuan, above the 1.085 billion yuan forecast by Thomson Reuters I/B/E/S. Revenue rose 8.5 percent to about 31 billion yuan and gross profit margin rose 2.13 percentage points to 31.23 percent.

Earlier this month, smaller rival Uni-President China Holdings Ltd reported a 25.4 percent rise in first-half net profit.

$1 = 6.8740 Chinese yuan Reporting by Donny Kwok; Editing by Sherry Jacob-Phillips and Sai Sachin Ravikumar

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