Lower raw materials costs have helped China’s Tsingtao Brewery to report a leap in profits for 2009.

Tsingtao said today (9 April) that net profits attributable to equity shareholders rose by 79% for the 12 months to the end of December, to CNY1.25bn (US$183m) from CNY699.5m in 2008.

“The overall profitability of the beer industry obtained a great improvement which was attributable to the significant drop of the price of imported barley, and that the price of other raw materials continued to be kept at a low level,” the company said.

Group net sales in the year rose by 12.5% to CNY17.76bn, against CNY15.78bn in 2008, said the firm, which is 20%-owned by Japan’s Asahi Breweries.

Price rises and lower costs helped the brewer to expand gross margins by 2.6% during the year.

Group volume sales rose by 10% to 59m hectolitres (hl), twice as fast as the market, which increased by 5% to 429mhl. Sales for the Tsingtao brand jumped by 22% to 29.5mhl for the year.

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Tsingtao said that competition in China became “extraordinarily severe” in 2009 as beer market volume growth slowed.

The firm said it expects to increase volume sales in 2010 at 2% ahead of the market, and will focus on cost cutting and market share gains in the premium sector.  

Commenting on the economic outlook more broadly, Tsingtao said: “The domestic consumption market will make further recovery, which will be helpful to the continuous and steady growth of the beer industry.”

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