Kweichow Moutai (SHA:600519) reported a slight drop in first-half profit as rising production and input costs weighed on margins even as sales volumes and revenue grew.
The baijiu liquor manufacturer's attributable net income slipped 1.95% year over year to 44.5 billion yuan, or 35.57 yuan per share, according to a Shanghai bourse filing over the weekend.
Revenue inched up 1.47% year over year to 90.7 billion yuan on the back of increased sales volume during the reporting period.
However, operating costs climbed faster than sales, up 21.8% year over year, which Moutai said reflected both the higher volume and increased production costs.
Domestic sales accounted for the large majority of revenue at 89.6 billion yuan, compared with 1.04 billion yuan from overseas markets.
Research and development spending also jumped 55.5%, which the company linked to increased investment in capitalized projects, while finance expenses fell as bank deposit rates declined.
Last month, the company raised prices on its flagship Feitian 53% 500-ml baijiu liquor product by 100 yuan per bottle. The iMoutai platform retail price increased to 1,639 yuan per bottle, while the contract sales price rose to 1,369 yuan per bottle.
Moutai said its first-half performance demonstrated its "resilience," despite the liquor industry undergoing "profound cyclical and structural adjustments" and amid increasing market competition.
The distiller produced 41,000 tons of its Moutai-branded liquor and 31,000 tons of series liquors in the first half.
Elsewhere in the company's first-half results, Moutai said its domestic dealer network saw 220 dealers added and 266 removed during the period, primarily among its wine series liquor dealers, leaving 2,307 domestic dealers. Its overseas dealer count stood at 119, with 14 added and 21 removed.
