China: Tsingtao Brewery, the mainland's biggest brewer, posted on August 13 higher-than-expected first-half earnings, boosted by stronger sales of its premium namesake brand, but warned that an influx of foreign brewers meant competition was heating up. The company, in which Anheuser-Busch holds a 9.9 per cent stake, said net profit jumped 33 per cent to 144.8 million yuan (HK$143.8 million), or 0.14 yuan per share for the six months ended June 30, compared with 109 million yuan, or 0.109 yuan per share a year ago. The results beat an analysts' forecast of 108.2 million yuan in a survey by Reuters.

Sales rose 13 per cent to 3.87 billion yuan from 3.43 billion yuan. The recent flood of foreign investment in Chinese breweries has strengthened its rivals, the company said. ``Second-half market competition will be increasingly fierce,'' chairman Li Guirong said.

Tsingtao said first-half sales rose 14 per cent by volume to 1.88 million kilolitres, with shipments of its more expensive flagship brands growing 13 per cent to 570,000 kilolitres.

Fan Cheuk Wan, deputy head of China research at ABN Amro, said that given that volume and turnover growth are in line with expectations, something must have changed on the cost front.

“The key surprise is the interest expenses. They have lowered their interest expenses,'' said Lillian Leung, senior analyst at Macquarie Securities. Fan said Tsingtao management had previously complained about the difficult operating environment, with severe margin pressures and difficulty in passing on costs to customers.

14 August, 2004