CHINA: Tsingtao Brewery full-year profits soar

Lower raw materials costs have helped China's Tsingtao Brewery to report a leap in profits for 2009.

Tsingtao said today (9 April) that net profits attributable to equity shareholders rose by 79% for the 12 months to the end of December, to CNY1.25bn (US$183m) from CNY699.5m in 2008.

"The overall profitability of the beer industry obtained a great improvement which was attributable to the significant drop of the price of imported barley, and that the price of other raw materials continued to be kept at a low level," the company said.

Group net sales in the year rose by 12.5% to CNY17.76bn, against CNY15.78bn in 2008, said the firm, which is 20%-owned by Japan's Asahi Breweries.

Price rises and lower costs helped the brewer to expand gross margins by 2.6% during the year.

Group volume sales rose by 10% to 59m hectolitres (hl), twice as fast as the market, which increased by 5% to 429mhl. Sales for the Tsingtao brand jumped by 22% to 29.5mhl for the year.

Tsingtao said that competition in China became "extraordinarily severe" in 2009 as beer market volume growth slowed.

The firm said it expects to increase volume sales in 2010 at 2% ahead of the market, and will focus on cost cutting and market share gains in the premium sector.  

Commenting on the economic outlook more broadly, Tsingtao said: "The domestic consumption market will make further recovery, which will be helpful to the continuous and steady growth of the beer industry."