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.
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