Starch manufacturer China Essence Group issues profit warning

The Board of Directors of China Essence Group Ltd announced that the Group expects to register a net loss for the second quarter ended 30 September 2012 in the financial year ending 31 March 2013 (“2Q FY2013”). The Group expects an adverse impact on profit margin for the second quarter as the operating environment remained challenging for the potato starch industry in People’s Republic of China.

In its second quarter for the financial year ended 31 March 2012 (“2Q FY2012”) results announcement dated 8 November 2011, the Group reported that the price of potatoes fell sharply in the second half of September 2011 due to a supply glut, causing the market price of potato starch to follow suit. Despite a moderate increase in potato prices in 2Q FY2013, the price of potato starch remained disproportionately low, causing a squeeze on the Group’s profit margin. The profit warning is based on a preliminary review of the unaudited financial results of the Group.

Further details of the Group’s performance will be made available when it announces its 2Q FY2013 financial results on 14 November 2012 after market close