China Resources Enterprise Ltd , the country's biggest supermarket operator and top beer maker, on Thursday posted strong growth in first-quarter profit, with core businesses in retail, beer, food and beverages reporting strong growth.
The company, which produces China's top beer brand Snow with one of the world's largest brewers SABMiller Plc , said profit for the first quarter totalled HK$826 million ($106.2 million).
The result compared with a HK$3.73 billion profit for the same period a year earlier, which included a HK$3.01 billion one-time gain from the disposal of the company's branded fashion distribution business.
Revenue rose to HK$26.67 billion during the period from HK$21.51 billion a year earlier, of which sales from the company's beer division rose 20.1 percent to HK$4.90 billion. Its food business jumped 24.1 percent to HK$2.26 billion, beverages soared 49.2 percent to HK$567 million, and retail rose 27.7 percent to HK$19.02 billion.
BEER SALES RISES
The company said profit from its beer division during the quarter rose 5.3 percent year on year. Beer sales volume rose 10 percent to about 1.91 million kilolitres, of which sales volume of Snow beer rose 11 percent to 1.73 million kilolitres.
The company, which operates more than 70 breweries in China, said operating costs increased due to a rapid rise in the cost of raw materials, and higher labour costs and taxes.
"The group will continue to seek and evaluate investment opportunities in a prudent manner while pursuing organic growth so as to achieve higher market share and thus maintain a leading position in the market," Chief executive Chen Lang said in the statement.
In April, competitor Tsingtao Brewery Co Ltd posted a 40 percent rise in first-quarter net profit on higher sales, as its distributors stocked up ahead of increases in prices of its beer products.
On the retail front, China Resources, which operates more than 3,300 stores in China with more than 70 percent self-operated, said same-stores sales rose 12.7 percent year on year but the retail business was also facing pressure on operating costs due to rising wages and taxes.
"Its results, especially for its retail business, are positive," said Linus Yip, chief strategist at First Shanghai Securities. "Even though it has been facing rising labour costs, its retail business is set to benefit as consumption rises on the back of income growth."
"The group will pursue a national expansion strategy that emphasises regional leadership and synergy on a multi-format business platform to strengthen its leading position in China's major regional markets," Chen said.
China Resources would also seek to strengthen its food processing and distribution businesses in China through acquisitions, he said.
Shares of the company were down 0.56 percent in early afternoon trade after the results, against a 0.31 percent gain by the Hang Seng Index .