Dukang Distillers Holdings issues profit warning for second quarter

SINGAPORE - Mainboard-listed Dukang Distillers Holdings said on Friday it expects revenue and earnings for the second quarter ended December 31 last year to be "significantly lower" than the same period a year ago.

The Chinese spirits producer told the Singapore Exchange in a filing this is mainly due to austerity measures and restrictions in China, which further compressed sales in the high-end alcohol market, and a change in drinking trends, which affected the baijiu market negatively.

In addition, the group's sales fell as its sales agents' logistics were affected by severe air pollution and smog, stricter traffic controls and poor traffic conditions, while competition in the Henan province liquor market has intensified. A downward adjustment of first-tier high-end liquor prices further decreased its market share in Luoyang, Zhengzhou, it said.

Dukang Distillers added that its baijiu production and operations are also expected to be significantly affected in the third quarter to March 31 this year, which will negatively impact revenue for that quarter.

This is owing to the continuing severe air pollution and poor weather conditions, and stricter inspections and enforcements imposed by the Chinese Government to fight air pollution violations.

But the group added that it expects its baijiu production to gradually recover from the middle of March this year, due to the consumption of more electricity from coal-fired power plants during winter in northern China.

Dukang Distillers is due to release its second-quarter results on or before February 14.