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Bottles of Nongfu Spring water at a supermarket in Hangzhou, China.
Costfoto | Barcroft Media | Getty Images
Shares of Nongfu Spring, China’s largest bottled water maker, plunged on Wednesday a day after the company reported a sharp slowdown in first-half profit growth.
Nongfu Spring’s Hong Kong-listed shares fell 12% on Wednesday, bringing their losses to more than 41% so far this year, according to London Stock Exchange data.
The company’s net income 8% year-on-year growth In the first half of this year, the company’s revenue was 6.24 billion yuan ($876 million), compared with 6.24 billion yuan ($876 million) in the same period last year. 23.3% growth in the first half of 2023.
In its exchange filing, Nongfu Spring said increased competition, online backlash and “malicious defamation” had hurt sales.
The company added: “Due to online public opinion in the first half of the year, the group’s brand reputation and sales of packaged drinking water products were adversely affected.”
In February, Zong Qinghou passed awayThe founder of rival Wahaha Group, a well-known patriot, reportedly led to his ccomparison with Nongfu Founder Zhong Shanshan It then evolved into a boycott of farmers’ products.
Chinese nationalist internet users Accusations against Nongfu Spring for having images of Japanese religious buildings on its green tea packagingwhich also triggered calls for a boycott. Some 7-Eleven stores have reportedly stopped selling Nongfu Spring products After the controversy.
Nongfu Spring, which claims the architectural motifs were inspired by Chinese temples, said it would “firmly take legal action against companies and individuals who defame” the brand.
The company said domestic demand overall was picking up, while noting that competition in the beverage sector was “increasingly fierce.”
Nongfu Spring’s packaged drinking water product revenue accounted for 38.5% of its total revenue, down 18.3% to 8.53 billion yuan from 10.44 billion yuan in the same period last year.
Revenue from tea beverage products, which account for 38% of the company’s total revenue, increased by nearly 60%.
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