Profit growth at Nongfu Spring, China’s biggest bottled water maker, slows sharply

Nongfu Spring, mainland China’ biggest producer of bottled water, reported a sharp slowdown in profit rise in the first half amid a brutal price war and uncertain economic outlook.

The company, based in Hangzhou, capital of eastern Zhejiang province, made a profit of 6.24 billion yuan (US$876 million) in the January to June period, an increase of 8 per cent from the same period a year ago.

While it narrowly beat analysts’ consensus forecast of 6.17 billion yuan in a Bloomberg survey, the profit increase was less than a third of the 25.3 per cent growth recorded in the first half of 2023.

Revenue climbed 8.4 per cent to 22.2 billion yuan, compared with a 23.3 per cent jump in the same period last year.

“The market potential of China’s soft beverage industry remains enormous and the competition among brands is increasingly intense,” Nongfu said in its earnings statement to the Hong Kong stock exchange on Tuesday. “As consumers’ demand for healthier beverages becomes more and more obvious, the market is also developing towards a direction that is more natural, healthier and encourages innovation.”

Nongfu’s shares closed 0.3 per cent lower at HK$30.2. The bottled water maker’s shares have slumped 31.9 per cent year to date.

In the first half, Nongfu’s revenue from packaged drinking water products fell 18.3 per cent year on year to 8.53 billion yuan.