Nongfu Spring's profit jumps 35pc to 7.2b yuan

Bottled water maker Nongfu Spring (9633) posted a 35.7 percent increase in net profit to 7.2 billion yuan (HK$8.8 billion) last year from a year ago and proposed a final dividend of 45 fens.

Total revenue during the period jumped by nearly 30 percent to 29.7 billion yuan and the gross profit margin inched up 0.5 percentage points to 59.5 percent.

Revenue from packaged drinking water products, which contributed 57.4 percent of its income, rose by 22 percent to 17.1 billion yuan. Tea beverage and functional beverage products brought the firm 4.58 billion yuan and 3.7 billion yuan last year, up by 48 percent and 32 percent from 2020, respectively.

Sales of juice beverage products advanced by 32 percent to 2.6 billion yuan and that of other products, including soda water beverage and coffee beverage, also grew by 66 percent to 1.75 billion yuan.

Nongfu Spring said its working capital level remained stable, and cash flow from operating activities in 2021 increased by 35.2 percent as compared to 2020, to 11.4 billion yuan.

The beverage industry in China has also resumed growth in 2021, with national beverage production exceeding 183 million tonnes, representing a year-on-year increase of 12 percent, the company said in an exchange filing yesterday.

Looking ahead, the outbreak of the Russian-Ukrainian war has made the international political and economic situation more complicated, reflected by the significant increase in the purchase price of raw materials such as PET, which is linked to the international oil price, and the rising prices of packaging materials and energy, the firm said.

All the above has exerted pressure of increasing costs on the manufacturer of packaged drinking water and beverages, Nongfu Spring said.

It will continue to adopt a prudent approach, pay close attention to the impact of and changes in all aspects, dynamically adjust its operations and take proactive responses, the company added.

Consumers' expectations for beverage choices and tastes have become increasingly diversified, and various brands are competing to launch new products in an increasingly fierce market environment, bringing forth more intense industry competition.

In addition to the promotion of optimization and innovation of products, it also facilitates the continuous expansion of the beverage market, with both opportunities and challenges, it pointed out in the filing.