Nongfu Spring (9633) H1 2024 earnings summary

Executive summary

• Revenue for the first half of 2024 reached RMB22,173 million, up 8.4% year-over-year, with strong growth in beverage segments offsetting a decline in packaged water sales.

• Net profit increased by 8.0% to RMB6,240 million, and basic EPS rose 8.0% to RMB0.55.

• Packaged drinking water revenue fell 18.3% due to negative online publicity and defamation, while beverage products revenue surged 36.7%, now accounting for 61.1% of total revenue.

• The company launched new products, including purified water, edible ice, and expanded tea, juice, and coffee offerings, and continued to invest in brand and product innovation.

Financial highlights

• Revenue: RMB22,173 million (+8.4% YoY); Gross profit: RMB13,032 million (+5.9% YoY); gross margin declined to 58.8% from 60.2% last year.

• Net profit: RMB6,240 million (+8.0% YoY); EPS: RMB0.55 (vs. RMB0.51 in 2023).

• Selling and distribution expenses: RMB4,971 million (+5.9% YoY); administrative expenses: RMB913 million (-4.8% YoY).

• Other income and gains: RMB1,040 million (+15.4% YoY), mainly from increased interest income.

• No interim dividend declared for H1 2024; final 2023 dividend of RMB0.75/share paid in August 2024.

Outlook and guidance

• The company remains confident in overcoming challenges from negative publicity and aims to strengthen its dual growth engines in water and beverages.

• Focus will remain on brand building, product innovation, and legal action against defamation, emphasizing a healthy and natural positioning.