CHINA: Kingway Brewery Holdings posts FY loss as sales slump
- FY net loss of HKD168.5m (US$21.7m) compared to HKD34.8m profit in 2011
- Net sales in 2012 drop by 12% to HKD1.55bn
- FY operating profits (EBITDA) down by 95%, hitting HKD11.2m
- Beer volumes fall by 14% to 804,000 tonnes
Kingway Brewery is to be sold to SABMiller's China JV
Kingway Brewery Holdings has posted a marked fall in sales, pushing the Guangdong brewer into the red ahead of its acquisition by SABMiller's China JV.
Net losses totalled HKD168.5m (US$21.7m) in the 12 months to the end of December compared to a HKD34.8m profit in 2011, Kingway said this week. Net sales fell by 12% to HKD1.55bn over the same period while operating profits dropped by 95% to HKD11.2m.
The group blamed the sales drop on a competitive environment and said margins were further squeezed by a 11.7% increase in the average costs per tonne of beer as raw and packaging prices rose. Volumes were also down, by 14% to 804,000 tonnes, the company said.
The difficult year led to China Resources Snow Breweries, a JV between SABMiller and China Resources Enterprise, agreeing last month to take over Kingway's beer business for US$864m. The Guangdong Daily reported today (22 March) that the deal is expected to complete in July or August.
Looking ahead, Kingway said China's strong outlook in the property market bodes well for Kingway's expansion into property investment once it offloads its brewing assets.
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