China Resources earns record $2.2b
Retail and brewery units expected to continue to spur growth amid robust demand and favourable state policies
Red-chip consumer product distributor China Resources Enterprise expects its retail and brewery units to continue to spur profit growth after helping deliver a record-breaking $2.22 billion last year, according to chairman Charley Song Lin.
Combined turnover of the retail unit's supermarkets and fashion brand distribution and the brewery unit's Snow beer would grow at least 10 per cent this year, thanks to favourable government policies and robust demand, he said.
China Resources, whose business also includes textiles, food processing, property and petroleum, registered 50 per cent growth across the board, having turned around two loss-making operations - supermarkets and textiles - from last year.
'I am satisfied with the overall results, which were difficult to achieve given punishing competition,' Mr Song said.
'The strong performance and growing market shares of our retail and beverage units mean that we are on the way to be the mainland's biggest consumer product company.'
Turnover hit a record $53.58 billion, up 13.8 per cent. Earnings per share rose 45 per cent to $1.02. The final dividend was raised 56.25 per cent to 25 cents per share, making the full-year payout 41 per cent higher at 38 cents.
The net profit included a one-off surplus of $403 million from revaluation of investment properties. Recurring profit was 23 per cent higher at $1.81 billion.
The profit contribution of the retail unit more than doubled to $107 million from $52 million in 2004 on a 17 per cent jump in turnover to $16.2 billion.
Supermarket chains Suguo and CR Vanguard provided much of that growth - $54 million - from a $7 million loss in 2004.
Earnings before interest, taxation, depreciation and amortisation of the supermarket operations improved 54 per cent to $576 million.
Learning what Mr Song described as lessons from the volatile cotton prices of 2004, the group's textile division returned to the black with an $81.19 million profit last year against a loss of $873,000 the previous year.
To encourage further growth in the retail and brewery units, Mr Song said between $3 billion and $5 billion had been earmarked for expansion this year. He expected this to be funded partly by cash from divesting non-core assets, largely from the petroleum and chemicals division.
This is despite the fact that the division was the most profitable as a result of high oil prices, contributing $623.87 million in profit, up 22 per cent.
'We will eventually withdraw from this business, which does not fit into our consumer product-based strategy,' China Resources said. 'However, we will dispose of the non-core assets step by step to avoid creating any sudden, significant earnings gaps.'