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Want Want China Profit Misses Analyst Estimates on Higher Costs

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March 8 (Bloomberg) -- Want Want China Holdings Ltd., the country’s largest maker of rice cakes and flavored milk, posted the slowest profit growth in four years, missing some analysts’ estimates, as raw material costs crimped its margins.

Net income rose 15 percent from a year earlier to $358.4 million Want Want said in a filing to the Hong Kong stock exchange today. That compares with the average $370 million of 16 analyst estimates compiled by Bloomberg. Sales rose 31 percent to $2.24 billion.

Profit margin narrowed by 2.3 percentage points to 16 percent because of “significant increases” in the prices of raw materials such as sugar, rice, palm oil, potato starch and plastic pellets, the Shanghai-based company said. Snack foods were the most affected, with gross profit margin in the business narrowing by 4.8 percentage points to 40.7 percent.

Want Want, controlled by Taiwanese billionaire Tsai Eng-meng, fell 3.4 percent to close at HK$6.45 in Hong Kong trading, the biggest decline since Feb. 24. The stock has lost 5.3 percent this year, trailing a 2.9 percent advance by the benchmark Hang Seng Index.

Earnings per share for the maker of Hot-Kid milk and Want Want rice crackers rose to 2.71 cents from 2.37 cents, according to the statement. The foodmaker said it will pay a final dividend of 1.36 cents a share.

To contact Bloomberg News staff for this story: Billy Chan in Hong Kong at bchan101@bloomberg.net; Michael Wei in Beijing at mwei13@bloomberg.net

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net

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