China liquor giant Moutai sees profits squeezed, shares drop

[SHANGHAI] Chinese luxury liquor maker Kweichow Moutai Co Ltd, a bellwether for the country's big spenders, posted its weakest quarterly profit growth since 2015, sending its share tumbling on Monday.

The world's largest listed alcohol firm by market cap, valued at around US$110 billion, said late on Sunday net profit in the three months to Sept. 30 rose 2.7 per cent, the weakest showing since a 12.4 per cent drop in the fourth quarter of 2015.

Moutai, which sells the pungent liquor baijiu for over US$200 per 500 ml bottle, raked in net profit of 8.97 billion yuan (S$1.78 billion) in the quarter versus 8.73 billion yuan last year. Revenues rose 3.8 per cent to 19.7 billion yuan.

The firm's shares slid on Monday morning, falling the maximum allowed 10 per cent, in line for the stock's worst day in more than five years, and weighed down the country's broader alcohol sector.

Moutai's performance will likely raise concerns about China's luxury market, an important battleground for LVMH to Remy Cointreau, which had seen a revival over the last year. Moutai's 2017 net profit had risen at its fastest rate in six years.

The brand has close ties with Chinese politics and has weathered a crackdown on luxury spending under President Xi Jinping. Its pungent liquor is often a lubricant at official banquets and business dinners, and it was once hailed as helping China's Red Army survive the tortuous Long March in the 1930s.

REUTERS