Several Chinese liquor makers see net profits drop in 2013, affected by macro-policies, market conditions in domestic market

Nevin Barich

BEIJING , February 11, 2014 (Xinhua News Agency) – China Focus: Most liquor makers suffer in 2013, but leading firm Moutai still optimistic

China's liquor-making sector has experienced difficult time in 2013, affected by macro-policies and market conditions in the domestic market. As of Monday, five of 12 liquor-making firms listed on the Shanghai and Shenzhen bourses had released financial reports forecast for 2013, showing most of them would see their net profits decline during the period.

According to company filings, Sichuan Swellfun (600779.SH) and Jiugui Liquor (000799.SZ) estimated to suffer huge losses since recent ten years last year. Sichuan Swellfun (600779.SH) predicted that it would incur net losses of 124 million yuan-160 million yuan, and Jiugui Liquor (000799.SZ) estimated to suffer net losses of 68 million to 78 million yuan last year, down 113.72 percent to 115.74 percent year on year.

Meanwhile, Sichuan Tuopai Shede Wine (600702.SH), Luzhoulaojiao (000568.SZ), and Golden Seed Winery (600199.SH) also saw weak performances in 2013, which projected to witness a year-on-year decline of 80 percent-100 percent, 20 percent, and 60 percent -80 percent respectively during the period.

Industrial insiders say that the liquor makers were under pressure recently by the government controlling official spending on banquets. The companies had to increase expenses to promote sales of high-grade liquor, which led to the decline of net profits of liquor markers in China.

Affected by safety scandal earlier, Jiugui Liquor (000799.SZ) announced on January 28 that 100 million yuan had vanished from one of its bank accounts in east China's Zhejiang Province in December. Later, two suspects have been apprehended in east China's Anhui Province. The case had a negative impact on the performance of the company.

However, China Kweichow Moutai Distillery Co. Ltd (600519.SH), a leading liquor maker in China, estimated to turn around its declining tendency, with registering a rise of 20 percent year on year in its net profit. Meanwhile, from January to September, Moutai witnessed year-on-year growth of 6 percent to 11 billion yuan, and its operating turnover reached 21.9 billion yuan during the period, up 10 percent year on year.

The company has adjusted and optimized industrial structure in 2013, and continued to promote high-end products. Ping'an securities say that the sales value in January of 2014 were better-than-expected due to China's spring festival holiday. On Tuesday, Moutai Distillery Co. Ltd (600519.SH) surged 1.56 percent to end at 134.93 yuan, re-becoming the highest-priced stock in China's A-share market. (By Ma Xin, maxin11@xinhua.org)

(c) 2014 Xinhua News Agency

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