Billion-Dollar Acquisition "Aftermath"? China Resources Beer's Liquor Business Posts Massive Loss, Goodwill Even After Impairment Exceeds Full-Year Net Profit | Financial Report Analysis

Why does the goodwill impairment of China Resources Beer remain high after acquiring Jinsha Brewery?

Cailian Press, March 23 (Reporter Zhu Wanping) — Due to significant goodwill impairment, China Resources Beer (00291.HK), the leading domestic beer company, saw its net profit decrease by nearly 30% last year, with the decline slightly better than the company’s previous earnings forecast. After recording a large goodwill impairment, the company still has over 4.5 billion yuan in liquor goodwill on its books.

Today at noon, China Resources Beer announced its 2025 performance. Last year, the company achieved revenue of 37.99 billion yuan, down 1.7% year-over-year, and net profit of 3.37 billion yuan, down 29% year-over-year, slightly better than earlier forecasts. Previously, China Resources Beer issued a earnings forecast expecting full-year net profit of 2.92 billion to 3.35 billion yuan, a decline of 29.6% to 38.6%.

China Resources Beer’s Snow Beer Brand (Photo by Cailian Press Reporter Zhu Wanping)

Looking at business segments, China Resources Beer’s beer operations remain steady. Amid overall industry contraction, last year the company’s beer sales reached 11.03 million hectoliters, a 1.4% increase year-over-year, with revenue stable at 36.489 billion yuan. Sales of premium and above beers grew by mid-to-high single digits, accounting for nearly 25% of total sales. Core brands like Heineken, Old Snow Beer, and Red爵 saw sales increase by nearly 20%, 60%, and double, respectively. Coupled with raw material cost savings, the gross profit margin of the beer segment increased by 1.4 percentage points to 42.5%.

In contrast, China Resources Beer’s liquor segment performed “poorly.” Last year, its liquor revenue was 1.496 billion yuan, down about 31% year-over-year, with pre-interest and tax profit at -3.354 billion yuan, turning losses instead of profits.

The huge losses in China Resources Beer’s liquor business are mainly due to goodwill impairments. In 2023, China Resources Beer spent over 12 billion yuan to acquire a 55.19% stake in Guizhou Jinsha Brewery, creating substantial goodwill. In recent years, the liquor industry has undergone a deep adjustment period, and Jinsha Brewery’s performance has continued to decline. As a result, China Resources Beer recorded an approximately 2.877 billion yuan goodwill impairment related to its liquor business in 2025.

According to China Resources Beer’s 2024 financial report, the book value of goodwill in its liquor segment was 7.421 billion yuan, with this impairment accounting for about 38.77% of the liquor goodwill. After this impairment, the remaining goodwill in the liquor segment is 4.544 billion yuan, which exceeds the company’s net profit last year.

What is the outlook for the company’s liquor business? China Resources Beer stated in its announcement that it expects the liquor industry to continue its cyclical adjustment, with short-term focus on deep restructuring and structural optimization, and medium- to long-term focus on value reconstruction and new growth. The company will adhere to scale-first, lean efficiency, stabilize channel prices, explore new growth points, and strive to develop liquor into a second growth curve.

Although China Resources Beer has stated it will stabilize channel prices for liquor products, the reality seems less optimistic. “Zha Yi Jiu” (摘要酒), a core product of Jinsha Brewery, once had an official retail price as high as 1,399 yuan per bottle. However, Cailian Press noted that on e-commerce platforms like Pinduoduo, some stores sell “Zha Yi Jiu” (Premium Edition) for less than 200 yuan per bottle.

If the company’s liquor business cannot effectively recover in the future, whether China Resources Beer will face further goodwill impairments remains to be seen. On the other hand, the beer segment also faces significant challenges, including intensified industry competition and rising raw material costs such as aluminum cans, raising doubts about future profitability growth. Due to these concerns, after the earnings release today, China Resources Beer’s stock price plunged over 5% in the afternoon. However, by the close, the decline narrowed to 3.77%.

(Reporter Zhu Wanping, Cailian Press)