* 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 (Reuters) - 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 Reuters’ calculations.
“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 volume terms.
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: link.reuters.com/kyk77v ($1 = 7.7649 Hong Kong Dollars) (Reporting by Donny Kwok; Editing by Anne Marie Roantree and Stephen Coates)