(Corrects sales figure in third paragraph.)

April 8 (Bloomberg) -- - Tsingtao Brewery Co., the Chinese beer company founded by German settlers more than a century ago, said 2008 profit rose 30 percent on higher sales in the world’s largest market for the beverage.

Net income rose to 699.6 million yuan ($102 million), or 0.54 yuan a share, from 538.9 million yuan, or 0.41 yuan, the brewer said in a Hong Kong stock exchange filing today, citing international accounting standards. Profit was line with the 705.5 million yuan average estimate of 10 analysts surveyed by Bloomberg. Sales rose 17 percent to 15.8 billion yuan.

Weaker economic expansion in China, the world’s biggest beer market by volume, has led to slowing growth in beer sales as millions of migrant workers lost their jobs and income. The government may cut taxes on alcohol to boost consumption as part of its economic stimulus package, Chinese media said in February.

The beermaker, partly owned by Japan’s Asahi Breweries Ltd., sold 5.38 million kiloliters of the alcoholic beverage in 2008, up 6.6 percent from 2007.

The company proposed paying a final dividend of 0.25 yuan a share, compared with 0.22 yuan a year earlier.

The Qingdao-based brewer, with 12.8 percent of China’s beer market, lost its position as the second-largest seller after the formation of Anheuser-Busch InBev last year through a merger, giving it a combined 13 percent share. China Resources Enterprise Co. leads the market with an 18 percent share.

Tsingtao, now in third place, said on April 2 it will use its cash to target expansion of market share in northern Hebei and Shanxi provinces and the Yangtze River Delta.

Largest Brewer

Anheuser-Busch InBev, the world’s largest brewer, holds a 7 percent stake in Tsingtao after selling a 19.9 percent shareholding to Asahi Breweries.

SABMiller Plc, the world’s second-largest brewer, holds 49 percent of China Resources Snow Breweries Ltd., a venture with China Resources that makes “Snow” brand beer. The brand’s sales increased 19 percent to 6.1 million kiloliters in 2008, the company said in its annual report on March 31.

Snow has overtaken Anheuser-Busch InBev’s Bud Light as the world’s top-selling brand because of increased Chinese demand, SABMiller said in November. China’s per-capita beer consumption has doubled in the past 10 years on growth in consumer income.

Founded in 1903 in China’s eastern province of Shandong, Tsingtao sold shares publicly for the first time in Hong Kong and Shanghai in 1993.

Tsingtao entered the U.S. market in 1972 and now sells its products in more than 50 countries, according to the company’s Web site.

To contact the reporter for this story: Stephanie Wong in Shanghai at swong139@bloomberg.net

Last Updated: April 8, 2009 11:21 EDT