SINGAPORE (Aug 29): Baijiu producer Dukang Distillers Holdings sank deeper into the red with a loss of RMB112.4 million ($23.0 million) for the full year ended June, from a loss of RMB10.7 million a year ago.
Group revenue was nearly halved to RMB464.5 million in FY2017, from RMB865.0 million a year ago.
In a filing to SGX on Tuesday, Dukang says its baijiu production was severely affected due to the implementation of emission reduction control measures, which led to high customer attrition in the second half of the year as the group was unable to fulfil the sales demand from distributors.
Dukang incurred RMB23.0 million of other expenses for FY2017, mainly due to compensation to suppliers, production overheads during the suspension of production, and loss on re-measurement of assets ceased to be classified as held for sale.
The group also recognised an impairment loss of RMB31.0 million for FY2017 following a review on the recoverable amount of the non-current assets under the baijiu business segment in view of the weak demand.
As at end June, cash and cash equivalents stood at RMB190.2 million.
“The baijiu industry has entered into a vicious competition era. While we are grappling with the rising competition from the first-tier baijiu brand, the disruption in production due to the implementation of emission reduction control measures has further aggravated the situation,” says Zhou Tao, Dukang’s chairman and chief executive officer.
“In addition, there has been a significant shift away from the traditional baijiu towards wine and beer among the young consumers in China,” Zhou adds.
Shares in Dukang closed flat at 22 cents on Tuesday.
