China Resources profit falls 19pc amid rising costs

Mainland retailer China Resources Enterprise's net profit fell by nearly a fifth even as sales grew in the third quarter as rising labour costs dented margins.

The operator of more than 4,500 retail stores and distributor of the most popular beer brand on the mainland, Snow, saw its net profit drop 19 per cent year on year to HK$920 million while sales rose 19 per cent to HK$40.6 billion.

For the first nine months of the year, sales climbed 14.5 per cent to HK$112.4 billion.

But the increases in minimum wages and salary rises cut the underlying profit in its retail division by 2.6 per cent to HK$84 million.

The expansion of the breweries section paid off handsomely as net profit from the division jumped 50 per cent in the third quarter to HK$749 million.

Sales of Snow beer, which accounted for 90 per cent of the company's total beer sales, grew 9 per cent in the first three quarters to nearly 9 million kilolitres, boosted in part by an unusually hot summer.