Tsingtao expects net profit to plunge

The Tsingtao Brewery Company Limited has announced that it expects to see a drop in profit for its annual results, ended December 31 last year, of approximately 39 per cent year-on-year, according to the group’s filing with the Hong Kong Stock Exchange.
The profit decline is described as ‘attributable to the supplemental income tax payment’ as well as ‘the decrease in operating profits of the Company due to stringent market conditions in 2016,’ notes the filing.
Regarding the tax payment, the group notes that prior to 2007 the ‘tax authority had yet to reach a conclusion on how to deal with the differences in income resulting from the application of the expired income tax rate in the years prior to 2007.’
The result of the application of the expired preferential income tax rate requires the company to pay ‘approximately RMB338.9 million (MOP393.1 million/US$49.1 million), reducing the net profit attributable to shareholders for the 2016 year by the same amount.
The group owns a 60 per cent interest in the ‘Macau Company.’
According to the group’s most recent interim results, published on the Hong Kong Stock Exchange, the revenue from its Hong Kong, Macau ‘and other overseas’ segment in the six-month period ended June 2016 amounted to RMB274.64 million, whereas the net profit from the same region amounted to RMB34.84 million.
The group’s revenue during the six-month period in the segment saw a 19.78 per cent increase, whereas the group’s profit from the same segment hit 175 per cent of the results from the same six-month period in 2015.
Overall revenue fell 8.22 per cent during the period to RMB14.74 billion, while its net profit fell 73.63 per cent to RMB5.49 million despite an 11 per cent year-on-year reduction in the cost of sales and a 2.4 per cent reduction in selling and distribution expenses.
This was counteracted by a 12.95 per cent increase in finance expenses and a 100 per cent increase in non-operating expenses, according to the filing.