China: China Resources Beer posts 4.4% rise in annual pre-tax profit
China Resources Beer (Holdings) Co Ltd posted a 4.4 percent rise in annual pre-tax profit on March 21, benefiting from an increase in beer sales volume and average selling price, as well as focus on higher margin premium beers, Nasdaq reported.
The owner of the Snow beer brand said pre-tax profit came in at 1.82 billion yuan ($286.8 million) for 2017, below an average estimate of 1.94 billion yuan drawn from 19 analysts polled by Thomson Reuters I/B/E/S. It posted a pre-tax profit of 1.74 billion yuan in 2016.
Beer sales volume increased by 0.9 percent year-on-year to 11.82 million kilolitres, and the overall average selling price increased 2.7 percent year-on year. Snow beer brand accounted for about 90 percent of its total beer sales volume, it said.
China Resources Beer is in talks to acquire Heineken NV's China business in a deal that could be worth more than $1 billion, as it seeks new growth from premium brands, people close to the discussions have said.
Analysts have said they see further gains for the stock if the Chinese brewer co-operates or co-invests with international brands.
"Consumers also increasingly prefer mid- to high-end beer products and the group believes that there is still room for growth in the market," Chen said, adding it has moderately adjusted prices of some of its products to mitigate cost pressure.
The volume of beer sold in China has been declining since 2013 and is forecast to continue to fall, according to Euromonitor. Sales of higher-margin premium beers, however, have been growing at a double-digit rate each year during the same period.
In January, China Resources Beer said it had moderately raised prices of some of its products in certain regions, becoming the latest Chinese drinks maker to respond to higher packaging, raw material and labour costs.
Revenue rose 3.6 percent to 29.73 billion yuan.
Net profit jumped 86.6 percent to 1.18 billion yuan as it accounted for new income gained from China Resources Snow Breweries which became a wholly-owned unit in late 2016.
Rival Tsingtao Brewery is due to release its annual results on March 27.
Shares of China Resources Beer rose 2.2 percent prior to the results statement, outpacing a 1.2 percent gain in the benchmark index.
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