China Resources Ent’s Q3 net profit falls 12 pct
Consumer-focused conglomerate China Resources Enterprise (0291.HK: Quote, Profile, Research, Stock Buzz) posted a 12 percent fall in third-quarter earnings amid a rapid slowdown in Chinese domestic consumption due to the global financial crisis.
Chinese consumers grew more cautious with their spending as the economic crisis deteriorated and slower sales were expected at the company’s supermarket operations and its China joint venture with fashion retailer Esprit (0330.HK: Quote, Profile, Research, Stock Buzz), analysts said.
China Resources, which also processes meat, owns slices of container ports and investment properties and produces “SNOW” beer with SABMiller Plc. (SAB.L: Quote, Profile, Research, Stock Buzz), said China’s economic growth slowed during the reported period and the spreading financial turmoil and declining exports should further dampen the country’s economy.
“The economy is expected to slow down further in the last quarter of the year and 2009,” it said in a statement.
It hopes Beijing’s newly announced 4 trillion yuan ($586 billion) stimulus package can help counter the sharp economic slowdown.
Beijing-backed China Resources posted a net profit of HK$671 million for the three months ended September, versus HK$765 million for the same period last year.
But its beer sales volumes rose 5.7 percent in the third quarter to 2.62 million kilolitres. Its premium “SNOW” brand competes with the likes of Tsingtao Brewery (0168.HK: Quote, Profile, Research, Stock Buzz) and Yanjing Brewery 000729.SZ in the domestic market.
Profit contributions also rose 19 percent to HK$256 million in the three months thanks to cost controls and the satisfactory results from some new breweries recently bought by the company.
Shares in China Resources rose 0.9 percent to HK$12.94 before the lunch break on Wednesday but have fallen 61 percent this year, underperforming a 54 percent drop in the benchmark Hang Seng Index .HSI.
The firm’s share price performance was expected to remain in the doldrums in the short-term as about half of its profits were generated by cyclical assets in ports, textile and investment properties, which were all vulnerable in the current marco environment, analysts said.
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