Dynasty Winery Ltd saw its profits drop 30 percent in the first half of this year compared with the same period in 2005 despite an increase in sales.

Dynasty, which is a Sino-French joint venture, was hurt by the soaring costs of raw products, mainly imported grape juice.

Dynasty, one of the biggest wine makers in China, released its first-half earnings report in Hong Kong.

The report showed profits dropped 30 percent from the first half of last year to HK$81.9 million (US$10.5 million). Turnover, however, increased 12.5 percent to HK$575.5 million.

A cold winter in 2005 led to significant output loss, so grape juice prices increased a lot.

The costs took a while to show up on the balance sheet as Dynasty, like most wine makes, keeps a large amount of grape juice in storage.

Chinese wine makers saw their profits rise 12 percent during the first half of this year, compared with the same period last year. The growth rate is down considerable from last year, however, when profits soared 21 percent over 2004.

Dynasty plans to continue importing grape juice from Australia, which is much cheaper than buying from domestic vineyards.

It surprised people that importing grape juice from Australia is almost half the price of purchasing from domestic growers.

The company plans to increase the amount of grape juice it imports from Australia.

Yantai Changyu Pioneer Wine Co Ltd, the number one brand in China's wine market, reported its profits rose by 45.2 percent to 200 million yuan during the first half of this year in a release last month.

In 2005, its profits rose 53 percent year on year.

Changyu has a larger production base than Dynasty, so it's easier for the company to offset rising prices for raw materials.

Source:佚名