Kweichow Moutai’s H1 net profits surge 42.5 percent

Kweichow Moutai Co., China’s leading high-end liquor producer, has said its net profits surged 42.6 percent year on year in the first half of the year due to strong revenue growth at home and abroad.

The company raked in nearly 7 billion yuan (1.1 billion U.S. dollars) in net profits in the first half, according to the firm’s semi-annual report filed to the Shanghai Stock Exchange on Friday.

The profit growth was slower than the 73.5-percent annual increase in net profits seen in 2011.

The company saw its total business revenues rise 35 percent year on year to 13.3 billion yuan in the first half of the year, according to the report.

The report showed that the firm’s liquor products were warmly greeted in overseas markets, where business revenues surged 78.2 percent year on year in the first half.

Gross profit margins for the company’s Moutai liquor products remained as high as 90 percent or greater in the first six months.

The company’s performance has encouraged U.S. investment bank Morgan Stanley to buy 2.4 million additional shares of Kweichow Moutai over the last six months, making the bank the sixth-largest shareholder in the company.

However, the report noted that fierce competition among high-end liquor producers, China’s economic slowdown and “policy pressure” have challenged the growth of the company.

After China’s annual parliamentary sessions in March, the central government extended a ban on serving pricy high-end liquor at government banquets to trim excessive government spending.

Kweichow Moutai, other premium liquors and luxury foods were put on a “blacklist” in east China’s city of Wenzhou, where authorities said last month that they have completely banned the serving of luxury food and liquor during official banquets.

Kweichow Moutai’s shares closed 3.21 percent higher Thursday to reach 260.92 yuan per share. Its share price had fallen more than 4 percent as of 2:30 p.m. Friday.

Xinhua