Friday, June 28, 2013

Global Bio-Chem and Global Sweeteners cooperate with ADM

On June 6, 2013, Global Bio-chem Technology Group Co., Ltd. (Global Bio-chem) and Global Sweeteners Holdings Limited (Global Sweeteners) announced that they will cooperate with Archer Daniels Midland Company (ADM) for a year. After this operation, ADM will be the sole distributor of Global Bio-chem's lysine and Global Sweeteners' sweetener products in Asian and South American markets respectively. Moreover, according to this cooperation, the Global group can develop more effective technologies through the help of ADM.

In detail, according to ADM's indication, it will be the exclusive sales channel for several of Global Sweeteners' sweetener products. The marketing territory of the company will include various Southeast Asian countries, the Far East, Australia and New Zealand from June 2013. ADM maintains several regional sales offices in Asia, including those in China, India, Singapore, Japan and Australia.

Furthermore, ADM will also use its expansive marketing and sales network to distribute a variety of Global Bio-chem's lysine products to customers in South American countries such as Brazil and Argentina. As is known, lysine is a kind of amino acid commonly used by livestock producers to improve the nutritional value of animal rations. Global Bio-chem is one the world's leading lysine producers and ADM is a market leader of lysine in South America. As a result, it's beneficial for these two companies' further development.

"ADM is pleased to have the opportunity to provide many of the high-value products in Global Bio-chem's portfolio to our extensive network of customers in Asia and South America," said Ismael Roig, President of ADM Asia-Pacific. "This collaboration leverages the strengths of both companies for the benefit of customers, and we anticipate a positive response on both continents."

According to the 2012 annual report of Global Bio-chem, its revenue was USD1.53 billion in 2012, which decreased by 17% compared with USD1.84 billion in 2011. Moreover, its gross profit even decreased by 54% year on year, touching USD197 million in 2012 due to the increasing costs (mainly from corn) and lower sales prices of products.

The amino acid business is still the most important business of Global Bio-chem. The revenue and gross profit of the sector accounted for 54% and 93% of the company's total in 2012 respectively. However, due to the gloomy market in the feed industry and the lower sales price of lysine, the average sales price of the company's amino acids decreased by 19% compared with that in 2011 and the gross profit of the business also decreased by 46% year on year. According to the prediction by the company, it plans to expand its total capacity of lysine to 800,000t/a in 2013. As stated in the 2012 annual report of the company, its products faced intense competition from other players in the domestic market, while in the overseas market, it succeeded in maintaining stability in the sales volume and price of its products. As a result, the revenue from the company's export business in 2012 increased by 10% year on year. Thus, through the cooperation with ADM, it will facilitate Global Bio-chem's expansion of its lysine business around the world.

In addition, Global Sweeteners' revenue increased by 5.7% year on year in 2012, reaching USD583 million, but its gross profit decreased by 35.6% in 2012 over 2011. In 2012, the domestic price of sugar decreased, reducing the competitiveness of and demand for sweeteners. Furthermore, the increasing costs from raw materials and gloomy sales prices of products adversely impacted the gross profit of Global Sweeteners.

Entering into 2013, the price of sugar in China may continue to decrease. However, the new production lines of F55 HFCS in the Shanghai plant of Global Sweeteners will be put into full operation in 2013. As a high value-added product, F55 is expected to be a new profit growth source for the company since it is a popular sweetener in the beverage industry in the international market.

ADM is one of the world's leading agricultural product processors, with products mainly covering food ingredients, animal feeds and feed ingredients, biofuels and other products.

Table of Contents of Corn Products China News 1306:
Planting area of corn in China may keep on increasing in 2013
USDC announces final determination on anti-dumping investigation into China-made xanthan gum
China's VB2 export volume increases by 37.4% year on year in April
Chinese corn products Imp. & Exp. analysis in April 2013
Price update of corn products in June
Ex-works price of corn germ meal in China stays high in June 2013
Domestic market price of DDGS rebounds in May 2013
Fufeng Group's gross profit margin expected to rebound in 2013
Star Lake Bioscience sees sharp decrease in net profit in 2012
Global Bio-Chem and Global Sweeteners cooperate with ADM
NDRC publishes a new notice about crop straw utilization
COFCO to import 60,000 tonnes of corn from Argentina in 2013
China launches the second batch reserve of sugar in 2012/2013

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