(Yicai Global) Oct. 28 -- Shares of Haitian Flavoring & Food fell after the Chinese producer of soy sauce cited higher costs for a decline in third-quarter earnings.

Haitian Flavoring [SHA: 603288] fell a further 3.1 percent today to end at CNY61.70 (USD8.51), after slumping 6.2 percent yesterday. Since setting a record stock price in January 2021, the company has seen CNY400 billion (USD55.3 billion) erased from its market capitalization.

Net profit fell 6 percent to CNY1.3 billion (USD179.6 million) in the three months ended Sept. 30 from a year ago, the Foshan-based company’s latest financial report showed on Oct. 26. Operating income was CNY5.6 billion, down 1.8 percent.

It was the first time that Haitian Flavoring had reported a drop in third-quarter earnings since going public in February 2014. The setback was mainly due to high raw material costs and pressure on gross profit margins, it noted. Gross profit margin shrank to 46.5 percent from 36.2 percent in the first three quarters, compared with the same period of 2018.

Before Covid-19, the company’s annual net profit growth exceeded 20 percent for many years. That slowed to single digits last year and started falling this year.

The pandemic severely affected Haitian Flavoring’s distributors. In the first three quarters of the year, their ranks were reduced by 277 to 7,153, Yicai Global calculated.

Over the nine months, Haitian Flavoring had offline and online sales of CNY17 billion (USD2.4 billion) and CNY768 million (USD106.3 million), up 2.3 percent and 88 percent from a year ago.

After Haitian Flavoring published its latest trading report, some brokerages lowered the target price for its stock despite expressing optimism about the company’s future. Haitian Flavoring has been making adjustments, but in the medium and long term it still has the advantage of being the leading market player, according to a report released by Huatai Securities yesterday.

Editors: Shi Yi, Futura Costaglione