Heng Tai Consumables Group (HKG:0197) has warned that it anticipates that there will be a significant decline in net profit for the six months ended 31 December 2011 as compared to the corresponding financial period of the previous year.

The company said that its group's unaudited consolidated financial results for the six months ended 31 December 2011 are expected to continually be affected by (i) the tightening up of formalities of regulating edible foodstuff control in the domestic market of the PRC which has affected the revenue performance of the group's FMCG Trading Business and resulted in a decline in trading volume of this business unit; and (ii) the production uncertainties caused by variable and adverse weather conditions across the PRC in the first half of 2011, which have delayed the commencement of the group's plantation plans and have affected the revenue contribution of the group's upstream farming business, while the group is still incurring the operating costs for the upstream farming bases in the second half of 2011.

Further, the severe flooding that occurred in the second half of 2011 in Thailand has caused extensive and prolonged inundation of farmland in Thailand and affected and reduced the amount of available import of agri-products from Thailand into the PRC. Also, this resulted in increased costs in sourcing the otherwise available supplies and due to the unstable market conditions, the group has difficulties to fully transfer all the increased costs to the customers, the company said.

The fiscal 2011/12 interim results announcement is expected to be published before end of February 2012.