China slowdown sinks earnings at Aquatic Foods

Chinese marine foods and seafood processor and producer Aquatic Foods Group reported a drop in revenues and profits on Monday, citing growing pressure from a slower domestic economy.

The AIM-traded firm said unaudited aggregate revenues for the three months to 31 March were 7% lower year-on-year at CNY 214.8m (£22.5m), although volumes were up 17% as demand for its products continued at lower average prices.

Aquatic’s gross margins remained steady compared with the previous quarter at 24% overall, though it remained lower than the 31% achieved a year earlier.

Export revenues remained steady at 6% of total sales, compared with 7% in the corresponding period in 2015.

Its unaudited gross profit for the first quarter was CNY 52.3m, a 28% drop on the first quarter of 2015.

"The fall in revenue and gross margins reflects the pressure imposed by the macroeconomic conditions in China,” said Aquatic Foods Group chief executive Li Xianzhi.

“However the board is satisfied that the company remains profitable which demonstrates the strength and resilience of our business model,” he added.

Xianzhi explained that the challenging market conditions may continue further into 2016, though it will continue with its commitment to grow the Zhenhaitang brand domestically and to expand its processing capabilities and distributor network.

That will ensure the company is fully prepared to benefit from future opportunities once the macroeconomic environment improves, he added.

“In the meantime, the board believes that through increased promotional and brand awareness activities that our sales within the People’s Republic of China will improve as well as internationally by attracting new distributors,” Xianzhi added.

“The board is pleased with the group's resilience during the challenging economic environment, and we would like thank our employees and shareholders for their continued support.”