Rain dampens earnings for China Resources Enterprise
Sales at its beer unit slump in third quarter as mainland labour costs and minimum wage law in Hong Kong weigh on retail unit
Slower economic growth and rainy weather have taken a toll on China Resources Enterprise, with earnings at its beer unit falling in the third quarter and retailing profits slipping in the first nine months of the year.
Net profit rose 33 per cent year on year to HK$3.37 billion in the nine months ended September, buoyed by disposal gains and property revaluation.
Stripping the exceptional gains from revaluation and disposal of non-core asset, the underlying profit dropped 4.8 per cent to HK$1.80 billion in the first nine months.
"The greater frequency of rainy weather across the regions where we have a dominant market share has hammered the sales volume and price of beer as a whole," the company said in a press release.
With bad weather deterring visits to bars and clubs in the third quarter, beer sales dropped 1.3 per cent year-on-year to HK$9.15 billion in the three months ended September, while net profit slipped 5.8 per cent to HK$503 million.
Over 90 per cent of the nine million kilolitres of beer sold in the first nine months was sold under its main brand Snow. After expansion and acquisitions of breweries in Henan, Shanxi and Zhejiang provinces, the company runs more than 80 breweries with annual production capacity of more than 17 million kilolitres, strengthening its leading position in the mainland market. In the first nine months, profit from the beer unit was up 1.7 per cent year-on-year to HK$878 million.