CRE plans to open Pacific Coffee shops in mainland supermarkets

PUBLISHED : Friday, 27 August, 2010, 12:00am
UPDATED : Friday, 27 August, 2010, 12:00am

Hong Kong-listed China Resources Enterprise (CRE) reported yesterday that net profit in the first half rose 266.4 per cent and said it plans to begin opening Pacific Coffee shops in its mainland supermarkets.

The company, which acquired 80 per cent of Pacific Coffee from Chevalier Pacific Holdings in June for HK$326.6 million, recorded a net profit of HK$4.24 billion in the first six months, compared with HK$1.16 billion last year. This year's first half was boosted by one-off gain of HK$3 billion from the sale of its branded fashion distribution business.

'It's a right time to run the coffee business [in China] and customers would appreciate a more comfortable shopping environment,' said deputy managing director Frank Lai Ni Hium.

CRE set aside HK$5 billion in the second half as capital expenditure and 50 per cent of the money is reserved for mergers and acquisitions of supermarkets.

'The management had decided to keep the cash for more valuable acquisitions in these two years. That's why we won't pay a higher dividend to investors even though our net profits grew,' Lai said.

An interim dividend of 14 HK cents per share will be distributed, the same as last year.

Of the 2,900 supermarkets that CRE operates, Lai said at least 200 are big enough to accommodate a coffee shop. The company said in June its goal is to become the number one coffee house on the mainland. To do so it would have to open hundreds of Pacific Coffee outlets, as the US coffee chain Starbucks has some 376 shops on the mainland.

The conglomerate started streamlining its business in the past few years and it is about to complete divesting non-core business, such as textiles. Its future profit driver is expected to come from supermarkets.