China Resources Enterprise Ltd, a government-controlled supermarket operator and brewer, said profit rose 79 percent last year after selling its Hong Kong fuel-distribution unit and growing affluence boosted beer sales.
The maker of Snow brand beer reported net income rose to HK$4.96 billion (US$637 million), or HK$2.07 a share, beating analyst estimates. Sales fell five percent to HK$62.1 billion, the company said in a statement filed to Hong Kong's stock exchange yesterday.
China's average beer consumption per capita has doubled over the past 10 years to about 30 liters last year, the company said. Average disposable income of China's urban residents rose 17 percent to 13,786 yuan in 2007, and rural disposable income gained 15 percent to 4,140 yuan, boosting consumer spending.
"We see margin expansion in the supermarket operation and very high sales growth in the brewery business," Emma Liu, an analyst at Nomura International Hong Kong, said in a phone interview with Bloomberg News yesterday. "Its consumer-related businesses - brewery and supermarkets - performed very well."
The company is riding the growth in overall consumer spending in China, where retail sales rose 17 percent last year to 8.92 trillion yuan (US$1.27 trillion), according to the statement.
Two-thirds of sales and almost a third of profit were made in China.
Sales volume of Snow Beer jumped 69 percent to 5.12 million kiloliters, driving a 41-percent growth in company beer sales to reach HK$12.3 billion last year.