SHANGHAI, March 30 China's Tsingtao Brewery Co
posted its steepest annual net profit
decline in two decades on Thursday after a second successive
year of declining returns amid rising costs, weak consumption
and tough competition.
The brewer, China's second-largest by volume, said in a
stock exchange filing that 2016 net profit fell by 39.1 percent
to 1.04 billion yuan ($151 million). That compared with an
average forecast of an 8.3 percent fall in a Reuters poll of 19
China's beer market is the world's largest, but profits are
slim because of the thin margins on the light beer preferred by
Chinese consumers. However, a push into premium beers, including
the nascent but fast-growing craft beer market, offers the
promise of frothier returns.
"The overall consumption market was still weak," Tsingtao
said in a filing to the Shanghai stock exchange, pointing to
stagnant growth in mid to high-end catering and unusually poor
weather hitting demand for beer.
The brewer said that profit was also weighed down by
expiration of a preferential tax rate.
Having flagged the likely drop in full-year net profit
earlier in the month, the company reported revenue down 5.5
percent at 26.1 billion yuan, slightly below forecasts.
China Resources Beer Holdings Co, Tsingtao's main
domestic rival and owner of the popular Snow beer brand, this
month reported its first annual profit in three years.
($1 = 6.8880 Chinese yuan renminbi)
(Reporting by Adam Jourdan; Editing by David Goodman)