Nongfu Spring's 2025 revenue increased by 22.5% year-on-year to a record high, net profit grew by 30.9%, and a cash dividend of 11.134 billion yuan is proposed | Financial Report News

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Nongfu Spring announced its full-year 2025 results on Tuesday: achieved a revenue of 52.553 billion RMB, a year-on-year increase of 22.5%; net profit attributable to shareholders was 15.868 billion RMB, up 30.9% year-on-year, with profit growth notably outpacing revenue. The company's annual revenue surpassed the 50-billion RMB mark for the first time, with profits "magnified" thanks to cost reductions and improved expense efficiency.

Profit margins continue to strengthen. In 2025, the company’s gross margin rose to 60.5%, up 2.4 percentage points from last year. Sales and distribution expense ratio dropped to 18.6%, down 2.8 percentage points year-on-year, with a clear release of operating leverage. Based on the consolidated income statement, operating profit was approximately 20.985 billion RMB, corresponding to an operating margin of nearly 40%.

By category, tea beverages continue to be the main growth driver. Ready-to-drink tea revenue was 21.596 billion RMB, up 29.0%, with its revenue share rising to 41.1%; packaged water resumed growth after adjustments, with 18.709 billion RMB in revenue, up 17.3%. Juices and functional beverages also maintained double-digit growth, with juice up 26.7% year-on-year, a standout performance.

Shareholder returns also increased. The company proposes a final dividend of 0.99 RMB/share, totalling approximately 11.134 billion RMB, a significant increase over last year’s paid dividends. Meanwhile, the company holds cash and term deposits amounting to about 22.293 billion RMB; the capital-debt ratio at 11.4% remains stable. However, during the reporting period, the holding of foreign currency assets led to a foreign exchange loss of about 199 million RMB, and interest income dropped noticeably in the context of lower interest rates.

Performance Overview: After Breaking Through 50 Billion Revenue, Profit Growth Accelerated Due to “Dual Resonance”

Breaking down the income statement, in 2025 the company enjoyed a combined force of “increased volume + gross margin improvement + reduced expense ratio”:

• Revenue: 52.553 billion RMB (+22.5%);
• Gross profit: 31.808 billion RMB (+27.7%), gross margin 60.5% (+2.4pct);
• Pre-tax profit: 20.918 billion RMB (+32.5%);
• Net profit attributable: 15.868 billion RMB (+30.9%), net margin about 30.2% (up from last year's ~28.3%).

The chairman’s speech also revealed that, excluding one-off and non-operating gains and losses, profits in 2025 reached 15.999 billion RMB, indicating that the core business trend matches the reported growth.

Category Structure: Tea Beverages Secure Top Spot, Packaged Water Resumes Growth

In 2025, revenue and share by category (brackets show YoY growth):

• Ready-to-drink tea: 21.596 billion RMB (+29.0%), share 41.1% (last year 39.0%);
• Packaged drinking water: 18.709 billion RMB (+17.3%), share 35.6% (last year 37.2%);
• Functional beverages: 5.762 billion RMB (+16.8%), share 11.0%;
• Juice beverages: 5.176 billion RMB (+26.7%), share 9.8%;
• Others: 1.309 billion RMB (+10.7%), share 2.5%.

The most noteworthy structural change is: tea beverage revenue continues to widen the gap with packaged water, becoming the company's largest source of income; meanwhile, the “recuperative growth” in packaged water is key to stabilizing the company's base. Management attributes the recovery to construction of water sources, factory open sourcing initiatives, and expansion of the product matrix (including premium “ice” products).

Segment Profitability: Tea Drinks Contribute Most Profit, Juice Shows Exceptional Earnings Elasticity

The company disclosed “segment results” as adjusted pre-tax profit (excluding interest income, financial expenses, and headquarters costs, etc). In 2025, segment profit totalled 22.318 billion RMB, including:

• Ready-to-drink tea segment: 10.374 billion RMB, with segment margin about 48% (last year ~45%);
• Packaged water: 7.001 billion RMB, margin about 37% (last year ~31%);
• Functional beverages: 2.696 billion RMB, margin about 47%;
• Juice: 1.777 billion RMB, margin about 34%, up sharply from last year (~25%).

Looking at the changes, tea remains the core “scale + profit” cash cow; juice, with its high revenue growth, shows more earnings elasticity, reflecting the increasing profit boost from premium NFC and “17.5°” product lines.

Key to Gross Margin Increase: Declining Raw Materials and Adjusted Channel Order

The company attributes the improvement in gross margin mainly to falling procurement costs of packaging materials such as PET, cardboard boxes, and sugar. In addition to favorable cost trends, management stressed “controlling the sales share of e-commerce channels” to stabilize distributor pricing order and channel profitability—meaning the company still prioritizes a “sustainable pricing system” during growth, rather than simply chasing online volume.

Supporting this, depreciation and amortization reached 2.759 billion RMB (last year 2.445 billion RMB), reflecting continued capacity and supply chain investment. However, price system management during the cost down phase allowed this increased depreciation to not suppress overall profit margin.

Expense Side: Sales Expense Ratio Drops Significantly, Admin Costs and Equity Incentives Rise

In 2025, sales and distribution expenses were 9.800 billion RMB, up only 6.8% year-on-year, notably lower than revenue growth, with expense ratio dropping to 18.6%. The company explains the main reasons as:

• After the “Olympic year” of 2024, advertising and promotional spending declined year-on-year;
• Logistics expense rates fell due to category structure and sales volume changes.

Administrative expenses were 2.452 billion RMB, up 25.0% year-on-year, with expense ratio stable at 4.7% but absolute figure growing faster. Notably, share-based payment expenses rose to 77 million RMB (last year 6 million RMB), linked to a new round of stock incentives for employees; meanwhile, employee welfare expenses totalled about 5.1 billion RMB, reflecting ongoing organizational expansion and incentive investment.

Other Gains & Losses: Declining Interest Income, FX Losses Turn from Profit to Loss

“Other income and gains” were 1.72 billion RMB, down 19.2% year-on-year, mainly dragged by interest income: in 2025, interest income was 580 million RMB, down sharply from last year's 866 million RMB, reflecting lower returns amid falling rates.

“Other expenses” rose from 30 million RMB to 291 million RMB, mainly due to:

• FX loss of about 199 million RMB (last year was FX gain of 75 million RMB);
• Donation expenses of 68 million RMB.
  The company disclosed holding HKD 1.647 billion, USD 606 million, and other foreign currency assets at period-end, with FX exposure more directly impacting the income statement amid exchange rate fluctuations.

Balance Sheet: Ample Cash, More Aggressive Financial Asset Allocation, Inventory Turnover Slows

By end-2025, the company’s term deposits, restricted funds, pledged deposits, cash and bank balance totalled about 22.293 billion RMB, up slightly year-on-year; interest-bearing loans were 4.39 billion RMB, with capital-debt ratio at 11.4%, largely unchanged, maintaining a “high cash, low leverage” structure.

More notable is financial asset allocation: fair value through profit or loss financial assets at period-end reached 7.555 billion RMB, sharply up from last year’s 1.529 billion RMB, indicating the company increased trading financial assets to boost capital efficiency during the interest rate down cycle.

In terms of working capital, inventory reached 5.846 billion RMB, up year-on-year; management cited production stocking and full chain development of tea raw materials. Inventory turnover days increased from 82.3 to 95.5 days; accounts receivable remained low (period-end 598 million RMB), with turnover days dropping to 4.1, reflecting strong channel collection capability. Contract liabilities (advance payments) at period-end rose to 4.195 billion RMB, also reflecting channel pre-collection and activation rhythm.

Dividend & Investment: Proposed Dividend of 11.1 Billion, Adjusts IPO Proceeds for Capacity Expansion

The company proposes a final dividend of 0.99 RMB/share, totalling about 11.134 billion RMB; based on the full-year net profit attributable of 15.868 billion RMB, cash return is highly robust.

On the investment side, property, plant and equipment at year-end was 24.719 billion RMB, up year-on-year, with capital commitments around 4.906 billion RMB, still in expansion and supply chain strengthening phase. Meanwhile, the company announced it will adjust the unused portion of its IPO proceeds (HKD 726 million) from “basic capacity construction” to “purchase of production facilities and new plants,” and extend the remaining proceeds usage deadline to the end of 2027—amid FX volatility and equipment imports, this adjustment aims to reduce FX losses, enhance capital efficiency, and reserve capacity for water source and tea supply chain investments.

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