The board of China Essence Group has warned that the group is expected to report a net loss for the second quarter ended Sept 30.

It explained that the group suffered a decrease in sales volumes for all its products during the quarter, due to low production level.

The heavy flooding in northeast China during had severely reduced the potato yield as well as the starch yield.

Consequently, the lower starch yield has resulted in a higher unit cost of production. Coupled with the high finance and operating expenses, the China Essence expects to register a net loss for the quarter.

The profit warning is based on a preliminary review of the unaudited financial results, which will be made available on Nov 13.