CHINA: Market expansion boosts Lianhua profits

Posted by Josette Dunn on 1st April 2010

Hong Kong-based Lianhua Supermarket Holdings has booked an increase in profits for 2009 as expansion boosted revenues and offset flat same-store sales.Profit attributable to shareholders for the 2009 rose 30.7% to CNY507m (US$74m). Operating profit increased 46% to CNY648m for the period.

Turnover rose 16% to reach CNY24.02bn; however same-store sales were flat.

Business Growth

In 2009, the group added 558 sales outlets, including 11 hypermarkets together with three supermarkets transformed to hypermarkets, 314 supermarkets (including 183 new outlets of Lianhua and 131 new outlet of Hualian) and 230 convenience stores.

In June last year, Lianhua announced the acquisition of Hualian Supermarket Co. from Bailian Group Real Estate Co. for approximately CNY492m.

Ma Xinsheng, the chairman of Lianhua Supermarket said: “Noticeable progresses were seen in healthy market expansion, outlet layout optimisation, merchandise mix improvement and internal management enhancement in 2009. Despite being pressured by slightly increasing turnover with continuous cost hikes, a desirable growth was recorded in gross merchandise profit that securing a further substantial growth in profitability.”

The turnover of the group’s hypermarkets increased 9.48% to CNY13.04bn, which accounted for around 54.3% of the group’s sales. Revenues from the group’s supermarkets increased by 32.25% to CNY9.32bn.

Xinsheng said 2010 will be a “critical” year for the company to consolidate its businesses.

“The group will take initiatives to seek organic growth and opportunities for merger and acquisition in different regions. The group will proactively capitalise on opportunities in the economic recovery and the World Expo2010 Shanghai in order to achieve better results. The group will further strengthen its overall development, complete the full integration of Lianhua and Hualian and capture the opportunities for merger and acquisition,” Xinsheng said.

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