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.
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