Statistics

China resources profit rises ninefold as retail demand gains

(Agencies)
Updated: 2010-05-24 15:03

China Resources Enterprise Ltd, the Chinese partner of SABMiller Plc, said first-quarter profit increased almost ninefold as its retail business improved and it made money selling some units.

Net income in the three months ended March increased to HK$3.73 billion ($478 million) from HK$417 million a year earlier, China Resources said in a statement to Hong Kong's stock exchange today. Profit from continuing operations rose 62 percent to HK$716 million, it said.

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China Resources is concentrating on its consumer businesses to tap growing demand in China. The Hong Kong-based company will spend HK$8 billion this year opening new supermarkets and increasing stakes in breweries. Last year it sold its holding in a textile venture to its partner Esprit Holdings Ltd.

"Both the macroeconomic environment and consumer spending in the Chinese Mainland improved," leading to better retail sales, the company said. "The Group believes that its retail division will keep benefiting from the opportunities arising from the economic upturn with stable turnover and profit growth."

Sales increased 25 percent to HK$21.5 billion. Earnings per share rose to HK$1.56, up from 17 Hong Kong cents.

China Resources rose 0.8 percent to HK$25.15 in Hong Kong at the midday trading break, before the earnings announcement. The stock has fallen 11 percent this year compared with a 10 percent decline in the benchmark Hang Seng Index.

Rising sales

The company had more than 2,800 hypermarkets, supermarkets and convenience stores in China and Hong Kong at the end of March, the statement said.

Retail industry's sales in China rose 18.5 percent in April, extending a gain of 17.9 percent in the first quarter, according to government data.

First-quarter profit from China's Resources' beverage business increased 53 percent to HK$26 million, the company said today. The beer division reported a profit of HK$19 million, compared with a loss of HK$4 million a year ago, it said.

Beer sales by volume at China Resources Snow Breweries, in which SABMiller holds a 49 percent stake, gained 10.4 percent to 1.73 million kiloliters in the first quarter. Sales of its bestselling Snow brand increased 16.1 percent to 1.55 million kiloliters.

Profit from retail operations in the first three months more than doubled to HK$597 million and sales rose 51.6 percent to HK$14.9 billion, China Resources said.

First-quarter profit from food processing and distribution was HK$116 million, unchanged from a year ago, it said. Sales rose 4.6 percent to HK$1.82 billion, according to the statement.