* Full-year net profit is lowest in nine years, Q4 at a loss
* Strong beer sales fail to offset weak food business
* CRE aims to expand in lower tier cities
By Donny Kwok
HONG KONG, March 20 Retail-focused conglomerate
China Resources Enterprise (CRE) posted a
worse-than-expected 52 percent drop in full-year net profit, its
lowest in nine years, as solid growth in its beer business
failed to overcome a tough retail environment.
The company, which has a market value of $6 billion, said it
would step up expansion into smaller mainland cities after its
2013 profit from retail operations fell 65.2 percent from a year
earlier, with its food business down 84 percent.
Its full-year net profit fell to HK$1.91 billion ($246
million), the lowest since 2004, from HK$3.95 billion a year
earlier. That was below a forecast of HK$2.11 billion from
Thomson Reuters' Starmine SmartEstimate.
It posted a loss of HK$30 million for the fourth quarter,
compared with a HK$572 million profit in 2012, according to
"Pursuant to the Chinese government's rolling out of the
steady growth policy, the economy is expected to stabilise,"
chairman Chen Lang said in a statement.
CRE, which has interests in beverage making to operating
supermarket chains, said its turnover for full-year 2013 rose 16
percent from a year earlier to HK$146.4 billion.
In October, CRE announced a tie-up with the world's No.3
retailer, Tesco, posing a challenge to hypermarket
leader Sun Art Retail Group Ltd.
Sun Art had earlier in March reported a 15.2 percent rise in
net profit for 2013, with an expanding store network helping it
shrug off an economic slowdown.
CRE shares have been under pressure amid concerns over
online competition in the whole food retail sector in mainland
China, and worries about the negative impact from its planned
joint venture with loss-making Tesco China.
CRE, which owns China's top beer brand Snow, said beer
remained its major earnings contributor, with profit rising 14.6
percent to HK$943 million and beverage profit up 23.3 percent to
HK$106 million. Snow brand has a market share of 23 percent in
Rival Tsingtao Brewery Co Ltd is due to
announce its 2013 earnings next week.
CRE shares were up 0.8 percent after the earnings were
announced, outpacing a 1.4 percent fall in the Hang Seng Index
For additional detail on the company's results, please see:
($1 = 7.7649 Hong Kong Dollars)
(Reporting by Donny Kwok; Editing by Anne Marie Roantree and