Kweichow Moutai (600519.SS), China's flagship liquor brand, saw its earnings decline amid the country's economic slowdown.
Moutai reported operating revenue of 168.84 billion yuan ($23.3 billion) last year, down 1.2% from a year earlier, according to its annual report released Monday.
Net profit attributable to the parent company fell 4.5% year-on-year to 82.32 billion yuan. Net cash flow from operating activities plunged 33.5% to 61.52 billion yuan over the same period.
Gross profit margin fell 0.75 percentage point from the previous year to 91.18%. The net profit margin declined 1.75 percentage points to 50.53% over the same period. The figures indicate that not only did revenue shrink, but profitability relative to sales also deteriorated.
It marks the first time Moutai has posted a decline in both revenue and net profit since its listing in 2001. When Moutai went public in 2001, its revenue was just 1.618 billion yuan, but the company grew explosively alongside China's economic expansion.
In 2019, Moutai overtook state-owned banks to become the most valuable company by market capitalization on China's stock market. In 2021, its revenue surpassed 100 billion yuan at 109.4 billion yuan, placing it among the ranks of mega-cap corporations.
However, the impact began to take hold last year as the Chinese government effectively imposed a "liquor ban" on civil servants. Under the "Regulations on Practicing Thrift and Opposing Waste by Party and Government Organs" announced by the Chinese Communist Party in May last year, the provision of premium liquor and tobacco at receptions, meetings and business trips has been restricted.
As demand for Moutai declined, the company ramped up marketing efforts at the corporate level, including collaborative products with coffee and ice cream brands. Despite these various efforts, the company was unable to prevent the decline in overall revenue and profit last year.
