China Resources profit jumps 194pc

PUBLISHED : Thursday, 06 September, 2007, 12:00am
UPDATED : Thursday, 06 September, 2007, 12:00am

Red-chip conglomerate China Resources Enterprise yesterday posted a 194.49 per cent jump in first-half net profit on the sale of its petrol stations and said it would raise capital spending for this year by 45 per cent to fund acquisitions.

Net profit for the six months to June rose to a record HK$3.74 billion from HK$1.27 billion a year earlier, boosted by a one-off gain of HK$2.39 billion from the HK$4 billion sale of its Hong Kong petrol distribution unit to Sinopec Corp, the mainland's largest oil refiner.

Excluding the revaluation of investment properties and large disposals, underlying net profit rose 17 per cent to HK$1.06 billion. Sales grew 11 per cent to HK$35.15 billion.

The company declared an interim dividend of 15 HK cents a share.

Underlying earnings growth was driven by core consumer-related businesses including retail, brewery, food processing and distribution, which increased 32 per cent in profit, said managing director Mark Chen Shulin.

Profit from its retail business - mainly supermarkets and branded clothing stores - jumped 79 per cent to HK$263 million.

Its beverage business, through a 51 per cent-owned venture with the world's second-biggest brewer SAB Miller, contributed HK$118 million to total underlying profit, a rise of 55 per cent.

'The business trends are all very encouraging. We expect growth momentum to continue in the second half,' Mr Chen said, adding that full-year earnings this year were also expected to hit a record.

Mr Chen said the company had set aside more than HK$10 billion for capital spending this year, up from an original budget of HK$7 billion. Last year's capital expenditure was HK$3.6 billion.

'Acquisitions of breweries were faster than expected so we need to revise the [expenditure] budget upwards,' he said.

China Resources spent about HK$6.2 billion in the first half, mostly on beverage and retail acquisitions and will need HK$4 billion more in the second half.

Mr Chen said the company hoped to buy assets from its parent firm, including hypermarket chain operator Home World, and drug makers China Worldbest Group and Sanjiu Enterprise Group.

Shares in China Resources fell 1.55 per cent to HK$31.70 yesterday.