The poor retail result came despite a 51 per cent jump in turnover to $9.8 billion. In 2002, the retail division earned a profit of $100 million.

'The division will certainly be turned around this year,' deputy chairman and managing director Charley Song Lin said yesterday.

'It will be achieved through cost-cutting, raising internal efficiency, and widening product mix and product ranges.'

The group's turnover was 20 per cent higher at $34.65 billion. A final dividend of 14 cents per share was proposed, taking the full-year payout 9 per cent higher at 24 cents.

Earnings per share edged up 2.94 per cent to 70 cents.

Mr Song said he was confident the red chip would hit its target of $5 billion in profits from the retail division by 2007.

'Our target to become China's largest consumer product distributor has not faltered, and retail business will remain the most important part of our businesses,' he said.

This year, China Resources has earmarked between $800 million and $900 million of its planned $2.5 billion in spending on upgrading and expanding its supermarkets, hypermarkets and general merchandise stores.

The group would add between 30 and 35 supermarkets in Jiangsu and Zhejiang, Mr Song said.

China Resources operates 1,620 stores in Hong Kong and the mainland.

On the back of last year's 25 per cent growth in turnover in its 49.25 per cent-owned Jiangsu-based Suguo supermarket chain, the red chip planned to raise its stake to 60 per cent by the end of June, Mr Song said, without disclosing the price.

He added that retailing, brewery and food processing and distribution would be the key profit contributors this year.

The brewery division, which brews Snow beer, saw earnings grow 9 per cent last year to $98 million on a 6 per cent jump in turnover to $3.95 billion.

Mr Song said the production capacity of the brewery would receive a boost this year with a planned capital expenditure of $300 million.

'We expect Snow beer will be as popular as Tsingtao beer this year,' he said.

However, chairman Frank Ning Gaoning said the brewery in Qianpi, Zhejing, which China Resources acquired last month at a cost of nearly $300 million, would only bring in an insignificant profit contribution this year because its operations still required some restructuring.

The profit contribution of Ng Fong Hong, China Resources' food processing and distribution flagship, was barely unchanged at $340 million on a steady turnover of $4.8 billion.

The biggest earnings and turnover contributor last year was the red chip's oil and petrochemical division thanks to a non-recurring gain of $143 million from the disposal of a fuel facility at Chek Lap Kok airport.

The oil and petrochemical division's earnings increased by 48 per cent to $424 million on 20 per cent growth in turnover to $12.56 billion.