Hong Kong: China Resources hopes to see growth in H2 store sales

Consumer sector-focused China Resources Enterprise, which posted a 22.2 percent fall in first-half profit, hopes to see growth in store sales in its supermarket operation in the second half, the company said on September 3, according to Reuters.

"We believe there will be a significant improvement (in store sales) in the second half, hopefully returning to positive territory," managing director Long Chen told reporters.

Chen said store sales in its supermarkets in China and Hong Kong fell about two percent in the first-half period. He said the company has no plan to seek a listing in the mainland.

China Resources said its profit for January-June fell to HK$1.16 billion, compared with HK$1.49 billion in the year-ago period, due to a decline in profits in its retail, food processing and distribution, and investment property, while its textile business was also took a hit in the global financial crisis.

Revenue increased to HK$35.05 billion in the six-month period, from HK$31.81 billion a year ago, of which the contribution from retail operations accounted for more than 54 percent of its revenue during the period under review.

"Future expansion will be carried out mainly through new store openings supplemented by same-store growth and mergers and acquisitions," chairman Qiao Shibo said in an earnings statement.

It operated more than 2,600 stores, in the formats of hypermarket, superstore, supermarket and convenience store, on the mainland and in Hong Kong as of the end of March 2009.

Sales growth of its beer operation remained strong during the first half period as the company further strengthened its presence in China.

China Resources said it would focus on its core retail, beverage and food businesses and would dispose of non-core businesses in the challenging economic climate. "Our previous emphasis was on market share through mergers and acquisitions, but the Group will now also focus more on profitability through cost control, risk management and cash management," Qiao added.

Shares of China Resources rose 5.3 percent to end at HK$18.60 on Thursday. (US$1=HK$7.75)

09 September, 2009