Hong Kong-listed Tsingtao Brewery's net earnings slid 6.9 per cent in the six months to June 30 despite sales growth of 50.6 per cent during the same period. The fall in earnings was mainly due to the company's aggressive acquisition of several small breweries. During the first half, the brewer saw its turnover surge 50.6 per cent to 1.7 billion yuan (about HK$1.5 billion), compared with 1.12 billion yuan in the previous corresponding period. However, Tsingtao said its net profit fell to 46.7 million yuan from 50.17 million yuan a year earlier. This represented a fall in the net profit margin to 6.9 per cent. Earnings per share were 5.2 fen compared with 5.6 fen a year earlier. The company offered no detailed explanation for the drop in profitability. However, Tsingtao Brewery chairman Li Guirong said the company had aggressively expanded its marketing and promotion budget in a bid to boost its share in the mainland's brewing market. The brewery also expanded its production capacity through several acquisitions. The company acquired three small breweries in Jiangsu Xuzhou, Hebei and Liao Ning in the first half of the year. As a result, the brewery's sales volume rose 62 per cent to 720,000 tonnes during the period, while its share of the mainland's beer market grew by 2.22 per cent to 6.65 per cent. The company hopes to increase its share in the mainland's brewery market to 10 per cent. The brewer, which produces the mainland's best-known brand Tsingtao Beer, presently operates 29 breweries in the mainland and expects to increase production this year to 1.4 million tonnes from about one million tonnes last year. 'The company will continue to focus on acquisitions and expansion in major cities, areas with an affluent local economy and regions with high-quality water sources for brewing,' Mr Li said. Last week, Tsingtao paid HK$22.5 million to buy two smaller breweries in Beijing. On August 9, Tsingtao also announced it would pay HK$19 million to buy an unprofitable brewery in Shanghai from Carlsberg, which is scaling back its operations. Tsingtao also earlier declared a plan to become the second-biggest brewer worldwide by 2010. 'Our major focus in the second half year is to complete our acquisitions in Beijing and Shanghai.' said Mr Li. Shares in Tsingtao shed 4.26 per cent or 10 HK cents to close at HK$2.25 yesterday.