Companies

China Resources Q4 net falls, positive on 2011

(Agencies)
Updated: 2011-03-24 17:27

HONG KONG - China Resources Enterprise Ltd, the country's biggest supermarket operator and top beer maker on Thursday posted a sharp jump in 2010 earnings, fueled by growing sales in its core businesses and gains from the disposal of non-core assets.

The company, which produces China's top beer brand Snow with the world's second-largest brewer SABMiller Plc, said it expected a robust retail market environment in China in 2011.

Retail sales in China grew 18.4 percent in 2010, up from 15.5 percent in 2009, it said.

"We will further extend market coverage and the reach of our retail chain and beer business to reinforce our market leadership," China Resources said in a filing to the Hong Kong Stock Exchange.

China Resources, which operates more than 3,000 stores in the mainland, said profit for 2010 totaled HK$5.67 billion ($727.4 million), up from HK$2.91 billion in 2009. The result included a HK$3 billion profit from the sale of non-core assets.

Earnings were largely in line with a consensus forecast of HK$5.43 billion from nine analysts polled by Thomson Reuters I/B/E/S.

For the fourth quarter, net profit fell 48 percent to HK$373 million, probably due to year-end adjustments, based on Reuters calculations using full year data.

Shares of the company were up 0.5 percent after the results, in line with a 0.76 percent rise in the Hang Seng Index.

Planning expansion

The company operates more than 70 breweries in China and had a market share of more than 20 percent at the end of 2010.

It said profit from beer rose 27 percent to HK$685 million and was the second largest contributor after retail, which increased 27 percent to a profit of HK$830 million, excluding revaluation and disposal gains.

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However, the company faces challenges from increasing costs.

"The beer division will exert its influence to raise average selling prices in strong regions to cover the increase in raw materials and packaging materials costs," it said.

China Resources has been buying smaller rivals amid consolidation in the fragmented industry. It paid $161 million for buy a 21.4 percent stake in Kingway Brewery Holdings Ltd from Heineken-APB (China) Pte Ltd.

The move would help boost its ranking in Guangdong province, the country's third-largest beer market, to third from fourth, analysts said.