(Yicai) Aug. 30 -- Nongfu Spring, the leader in China’s bottled water market, said profit jumped 25 percent in the first half from a year earlier, as consumers went out more often and sales of tea drinks soared.

Net profit was CNY5.8 billion (USD795.6 million) in the six months ended June 30, the Hangzhou-based company said in an earnings report released yesterday. Revenue climbed 23 percent to CNY20.5 billion (USD2.8 billion).

People ventured out more frequently in the first half, and sales through ready-to-drink channels recovered in the wake of China’s Covid-19 restrictions being lifted, the company said. Income from its main bottled water product rose 12 percent to CNY10.4 billion in the period.

Nongfu Spring’s tea drinks, including Tea Pi and Oriental Leaf, also garnered further popularity, becoming the firm’s second growth curve. Income from these drinks surged 60 percent to CNY5.3 billion, accounting for 26 percent of the firm’s total revenue, a nearly 6 percentage point gain.

The sugar-free tea drinks market is expanding quickly, and Oriental Leaf, the biggest brand among them in China, will continue to benefit from that rapid growth, Haitong International Securities said in a report earlier this month. Revenue from Nongfu Spring’s tea drinks will top CNY10 billion this year, it predicted.

The firm’s first-half income from functional drinks rose 22 percent to CNY2.5 billion, while that from fruit drinks jumped 32 percent to CNY1.7 billion.

Gross profit margin stood at 60 percent, versus 59.1 percent a year ago. Sales and distribution costs hit CNY4.7 billion, surging 30 percent due to higher spending on marketing and advertising.

Consumption in China will likely continue to grow this year as the economy recovers and domestic demand rises, Nongfu Spring said. But the global economy is developing more slowly, so there is still great inflationary pressure, and the company will make greater efforts in cost control and risk management to seize market opportunities and carefully address the challenges, it added.

Nongfu Spring’s stock price [HKG: 9633] fell 1.2 percent to finish at HKD42.75 (USD5.45) in Hong Kong today. The benchmark Hang Seng Index was unchanged.

Editor: Martin Kadiev