China Resources Enterprise Profit Falls on Higher Retail Costs

China Resources Enterprise Ltd. (291), the state-backed hypermarket operator and beermaker, said third-quarter profit fell 19 percent amid higher costs in its retail operations and a year-earlier gain from asset sales.

Net income dropped to HK$920 million ($119 million) in the three months ended September from HK$1.14 billion a year earlier, the company said in a statement to Hong Kong’s stock exchange today.

A campaign by authorities to stamp out gifting and corruption among government officials hurt sales of pricey items such as liquor and high-end cigarettes at the company earlier this year. Higher labor and raw material costs also hit the retail and beer businesses at government-backed China Resources, which makes the country’s best-selling Snow beer brand with SABMiller Plc.

Tesco Plc (TSCO), the largest U.K. retailer, is combining its 134 outlets and shopping-mall business in China with the almost 3,000 stores owned by the state-backed conglomerate in China and Hong Kong. Tesco will pay HK$4.33 billion to gain 20 percent of a venture with the Chinese company owning the rest, according to their agreement announced this year.

To contact Bloomberg News staff for this story: Liza Lin in Shanghai at llin15@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.