China Resources Beer Misses Estimates as Sales Slow

Updated on
  • Beer earnings were 11 percent below analyst estimates
  • Company sold some assets including loss-making Tesco venture

China Resources Beer Holdings Co., the maker of the world’s best-selling beer, reported earnings that missed analyst estimates as sales slowed amid a competitive market and a slowing economy.

Underlying profit for the beer assets rose 14 percent to HK$831 million ($107 million) in the 12 months ended December, missing an average estimate of HK$933 million from 15 analysts compiled by Bloomberg. The underlying figure excludes asset revaluation and major disposals. Beer sales last year rose 1 percent to HK$34.82 billion.

China Resources’ Snow beer is the world’s top beer brand, but its presence is predominately in China, where economic growth was at 6.9 percent last year, the least since 1990. The nation’s beer market is one of the most competitive, with major brewers including Tsingtao Brewery Co., Beijing Yanjing Brewery Co., Anheuser-Busch InBev NV, and a myriad of smaller, regional ones.

The stock rose 3 percent to HK$15.10 in Hong Kong trading, the highest level since March 4 after the Chinese company said the deal to buy out the remaining 49 percent stake in its venture with SABMiller Plc has been submitted to the Ministry of Commerce. The update came from Jason Hou, the general manager of the venture, at a press conference in Hong Kong Friday.

The deal is scheduled to close at the end of this year and impact earnings only in 2017.

Snow beer, which has some of the lowest prices in the market according to a January report from Macquarie Group Ltd., has struggled to get drinkers to switch over to its higher-priced offerings, which would offer the company bigger margins.

The company had sold its non-beer assets, including its money-losing retail venture with Tesco Plc, to its parent for HK$30 billion last year. This was to allow it to focus on its top-selling Snow beer as the existing multi-business structure didn’t reflect its full value, it had said.

Underlying losses at discontinued operations, comprising retail, food and beverages, widened to HK$5.65 billion from HK$1.52 billion, it said Friday.

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