• FY net profits drop 20% to CNY1.6bn (US$246m)
  • Net sales slip 5% to CNY27.6bn
  • Operating profits down 19% to CNY1.9bn
  • Volumes decline 7% to 84.8m hectolitres

China's Tsingtao Brewery has posted a sharp drop in profits after volume declines outpaced the struggling Chinese beer market's average.

Volumes for the Tsingtao beer owner slipped 7% to 84.8m hectolitres in 2015, the company said this week. Overall, Chinese beer market volumes were down 5% in the same period, according to Tsingtao.

Net profits for the company were down 20% to CNY1.6bn (US$246m) in 2015 as net sales fell 5% to CNY27.6bn. Operating profits were down 19% to CNY1.9bn.

The company blamed the declining market for the sales and profits drops and set a 2016 target of volume growth two percentage points higher than that of the industry. It also said it will continue to expand the domestic and overseas markets and develop the mature coastal and Yellow River basin areas.

Brewers in China have been hit by an economic slowdown that has decreased consumer spending. Rivals to Tsingtao such as Anheuser-Busch InBev and China Resources Beer (CRB) have moved their brands up the value chain to create profits growth despite slower sales. In 2015, 49% of CRB's sales volumes came from the above-mainstream segment, compared to 29% in 2012, according to the company's latest full-year results.

Tsingtao said it gave priority last year to high-value-added products such as canned beer and is upgrading its product mix. In 2015, Tsingtao became China's first beer to have a brand value over CNY100bn, the brewer said.

Also last year, Japan's Suntory pulled out of its two Chinese joint ventures with Tsingtao Brewery.

To read the company's official results release, click here.