Sales, earnings up at Dukang Distillers despite challenging year

Chinese white wine maker Dukang Distillers Holdings has posted a 52.5 per cent rise in second quarter net profit to 144 million yuan (S$28.6 million).

Revenue for the three months ended Dec 31 was up 36.7 per cent at $738.3 million.

On a quarterly basis, the group's revenue registered a jump of 81.6 per cent from the first quarter, with overall sales volume increasing by 75.5 per cent to 17,871 tonnes.

Typically, the second and third quarters will experience peak sales as demand for baijiu, or Chinese white wine, increase due to colder weather as well as during the major Chinese holidays and festivities during the period.

Gross profit margin improved from 37.9 per cent to 39.6 per cent on higher pricing of the Dukang brand products and better sales mix.

Earnings per share climbed to 18.04 fen from 11.82 fen in the corresponding period last year while net asset value per share improved to 222.11 fen compared to 196.07 fen as of June 30.

As to its prospects, Dukang Distillers said 2012 was a challenging year for the baijiu industry due to a slowdown in the Chinese economy growth and the clamp down on government profligacy, which led to the ban on luxury baijiu at the expense on public funds.

The situation was further aggravated with the plasticizer contamination scandal haunting a number of renowned baijiu brands at the end of the year.

Dukang Distillers chief executive Zhou Tao says the company has minimal exposure and is not much impacted by the current policies as they are primarily targeted at the first-tier baijiu brand.

"The decline in the first-tier baijiu brands provides a good opportunity for second-tier baijiu to develop due to the lower pricing," he noted.

"Dukang is currently a second-tier brand, which puts us in a sweet spot to leverage on this opportunity."

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