Wuliangye Yibin’s profit growth sinks to 10-year low hit by China’s austerity drive
First-half revenue and profit at China’s second-largest liquor distiller grew at the smallest pace since 2015
Wuliangye Yibin, China’s second-largest liquor distiller, reported its slowest earnings growth in a decade, reflecting the impact of an intensified anti-corruption campaign on ostentation and a slowing economy that has also affected its peers.
First-half revenue of the Yibin, Sichuan-based company rose 4.2 per cent to 52.8 billion yuan (US$7.4 billion) from a year earlier, while net profit attributable to equity holders increased 2.3 per cent to 19.5 billion yuan, according to its earnings statement published on Wednesday. Both revenue and profit grew at the slowest pace since 2015.
Earlier this month, China’s largest baijiu maker, Kweichow Moutai, reported an 8.9 per cent growth in revenue and a 5.3 per cent increase in net profit for the first half, both the slowest in a decade.
Earlier this week, peer Jiugui Liquor reported a 43.5 per cent drop in revenue and a 92.6 per cent plunge in net profit, also its worst in 10 years.
Baijiu, Chairman Mao Zedong’s favourite drink, is regularly served at government banquets and family gatherings. With prices ranging from a few yuan to thousands, it is a staple of Chinese culture. China is also the world’s largest consumer of alcoholic beverages.
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Baijiu, China's national spirit, seeking markets abroad where taste still fails to intoxicate
A report from Guosen Securities this month said that policy factors led to a sharp reduction in baijiu consumption in the second quarter, which resulted in a significant drop in sales of mainstream products.