CHINA: Tsingtao Brewery Co sees H1 growth outpace China cooldown

• Net profits creep up by 0.3% to CNY1.05bn (US$165m) 
• Net sales increase by 11% to 13.4bn    
• Operating profits rise by 3% to 1.3bn   
• Value-added products post 14.9% volumes growth compared to 4.85% growth for China beer market

Tsingtao Brewery Co's premium brands outpaced first-half growth in lower-margin labels as China's economic slowdown cooled the country's beer market.

Net profits stayed mainly flat at CNY1.05bn (US$165m) in the first six months to June 30, the Chinese brewer reported today (16 August). Net sales jumped by 11% to CNY1.3bn while operating profits climbed by 3% to CNY1.3bn.

Total volumes increased by 11.3% to 41.8m hectolitres. The Chinese beer market posted 4.85% growth, compared to 11.4% over the same period last year, as China's economy slowed and because of low temperatures over the six months.

Tsingtao's namesake brand posted 8.2% volumes growth, but was beaten out by premium brands such as Tsingtao draft beer, which together posted 14.9% volumes growth.

The cost of sales increased by 16.6% year-on-year. The company blamed the hike on sales volume growth as well as the higher cost of raw materials. 

The results highlighted Tsingtao's expansion in China as international company's target the country's growing market. Tsingtao has started building work on a new brewery in Jiangxi province, which will have an annual output capacity of 2m hectolitres. The group is also expanding its factories in Shanghai and Shandong.

Meanwhile, a recent change in management personnel “will not affect the company’s development strategy and targets”, the group added.

In June, the brewer's chairman Jin Zhiguo stepped down for “health reasons”.

Tsingtao also announced a dividend of CNY0.26 per share yesterday. The move will return CNY351m to shareholders.

To read the company's official statement, click here.

To view the company's H1 results last year, click here.