China Resources Enterprise sinks into losses

Supermarket operator China Resources Enterprise (CRE) sank into a HK$71 million loss for the third quarter, compared with a profit of HK$920 million for the same period last year.

In a statement to the Hong Kong stock exchange yesterday, the company blamed the poor results mainly on costs related to its Tesco joint venture.

Profit for the first nine months amounted to HK$858 million, down 55.7 per cent year on year.

The state-backed retail conglomerate, which runs supermarkets on the mainland under the CR Vanguard brand, agreed to help run British supermarket operator Tesco's ailing mainland business in an agreement completed in May.

The management said earlier in the year that it was expecting a significant drop in profit due to costs in revamping Tesco, including a HK$4.3 billion capital injection.

Shares of the company rose 1.78 per cent to HK$17.18 yesterday.

Retail operations fell 935.7 per cent to register a loss of HK$702 million in the third quarter, compared with a gain of HK$84 million a year earlier. Excluding Tesco stores, the retail division experienced a fall in same-store sales growth of 2 percentage points amid sluggish economic expansion and the government's anti-corruption campaign that crimped sales of high-end goods.