• Net profit down 54.5%
  • Net sales grow 12.3%
CRE earlier this month struck a deal with Tesco to form a joint venture in China

CRE earlier this month struck a deal with Tesco to form a joint venture in China

Retail chain China Resources Enterprise has booked a drop in first-half earnings but said it remains "optimistic" about the long-term development of the company.

In the six months to the end of June, earnings dropped 54.5% to HK$1.02bn (US$131.5m), the retailer reported today (21 August). The decline was primarily due to asset revaluation in the previous year, a non-recurring item this year, it said.

CRE, which earlier this month struck a deal with Tesco that could see it form a joint venture in China, said sales were up 12.3% to HK$71.86bn in the period.

The group's retail division delivered a profit of HK$637m, a drop of 63.7% on the prior year period. Its retail earnings were hit by an asset revaluation and the disposal of "non-core assets".

Excluding those items, CRE said its retail profits fell 4%. Revenue was up 13.7% with same-store sales 5.6% higher. The company said slower economic growth in China had affected consumer spending.

The group's food division, which CRE said was affected by a "macro-economic environment and restructuring", saw earnings fall 50.7% to HK$71m and sales drop 2.2% to HK$5bn.

"In the first half of 2013, ongoing fluctuations in the financial markets and moderate economic growth in China posted uncertainty to our operating environment," said CEO Hong Jie.

Click here to view the full earnings release.