China Foods (506) H1 2024 earnings summary

Executive summary

• Revenue for 1H2024 was RMB 11,335.1 million, down 9.0% year-over-year, mainly due to a 15.7% decrease in sales volume, especially in sparkling drinks.

• Gross profit margin declined by 0.9ppt to 34.6%, impacted by higher can procurement costs from increased aluminum prices.

• Adjusted EBIT increased 2.8% year-over-year to RMB 1,271.9 million and adjusted EBITDA rose 1.2% to RMB 1,682.5 million, with margins up to 11.2% and 14.8% respectively.

• Net profit attributable to owners was RMB565.2 million, with basic and diluted EPS at RMB0.2021, both lower than the prior year.

• No interim dividend was declared for the period.

Financial highlights

• Gross profit was RMB3,917.8 million, down from RMB4,418.4 million year-over-year.

• Distribution and selling expenses margin improved to 22.5% from 24.4%; administrative expenses margin stable at 1.9%.

• Net cash from operating activities increased to RMB1,639.7 million from RMB1,478.1 million year-over-year.

• Net assets attributable to owners rose to RMB6,167 million as of June 30, 2024.

• Net cash position (unpledged cash and cash equivalents) was RMB3,662 million as of June 30, 2024, up from RMB2,293 million at year-end 2023.

Outlook and guidance

• Management expects key raw material prices to remain stable in the second half of 2024 and will focus on product structure upgrades and business mix optimization to improve gross profit margin and build resilience against market volatility.

• The company aims for sustainable high-quality growth and further profit margin enhancement.

• External uncertainties remain, but domestic economic conditions are expected to support steady growth.