Sino Grandness 2Q earnings fall 33% to $21.5 mil on revenue decline

Lower revenue over the half-year period was attributable to lower sales of beverages as well as canned markets in both domestic and overseas markets, with the decrease in sales revenue from the beverage segment due to changes in the consumption environment of the domestic beverage market in China, says Sino Grandness in its regulatory filing to the SGX on Friday.

Largely in line with the decrease in the group’s sales, gross profit for the half year declined 21.7% to RMB601.7 million compared to RMB768.2 million a year ago.

Gross profit margins were also affected by higher raw material costs for canned products, with a change in product mix for the beverage segment with higher contribution from the Qingrun series of beverages, which commanded lower profit margin, according to the group’s chairman and CEO, Huang Yupeng.

The latest quarter’s results bring the group’s earnings for the half-year to RMB157.8 million, representing a 69.5% decline from the RM517.9 million in 1H16.

Consequently, earnings per share (EPS) for the half year fell 69.2% to 3.3 cents from 10.7 cents in 1H17.

Noting a trend of consumer online spending in China, Sino Grandness says it will continue to invest in various advertising, promotional, sales and marketing initiatives and activities in order to enhance its brand visibility and brand recognition in order to capitalise on growth opportunities ahead.

“In the long run, I remain optimistic about the growth potential of the consumer market in China due to its huge population base and rising disposable income… We will continue to grow our product range and explore various strategic collaborations in order to expand our online and offline distribution channels,” says Huang.

Shares of Sino Grandness closed 2.3% higher at 22 cents on Friday.