Nongfu Spring 2025 Revenue Reaches Record High with 22.5% Year-over-Year Growth, Net Profit Grows 30.9%, Plans Cash Dividend of 11.134 Billion Yuan | Financial Report Insights

Fronteer Mountain Spring announced its full-year 2025 performance on Tuesday: total revenue reached 52.553 billion yuan, a significant increase of 22.5% year-over-year; net profit attributable to the parent was 15.868 billion yuan, up 30.9%, with growth notably outpacing revenue. The company’s annual revenue for the first time surpassed 50 billion yuan, and profits expanded “amplified” by falling costs and improved expense efficiency.

Profit margins continued to strengthen. In 2025, the company’s gross profit margin rose to 60.5%, an increase of 2.4 percentage points from the previous year; selling and distribution expense ratio decreased to 18.6%, down 2.8 percentage points year-over-year, with clear release of operating leverage. Based on the comprehensive income statement, operating profit was approximately 20.985 billion yuan, corresponding to an operating profit margin close to 40%.

Looking by category, tea beverages continue to be the main growth “engine.” Ready-to-drink tea revenue was 21.596 billion yuan, up 29.0%, with its revenue share increasing to 41.1%; packaged water business recovered growth after adjustments, with revenue of 18.709 billion yuan, up 17.3%. Juice and functional drinks also maintained double-digit growth, with juice increasing by 26.7% year-over-year, showing excellent performance.

Shareholder returns also increased in tandem. The company plans to pay a final dividend of 0.99 yuan per share, totaling approximately 11.134 billion yuan, a significant increase compared to last year’s dividends; at the same time, the company’s cash, fixed deposits, and other liquid assets totaled about 22.293 billion yuan. The capital-debt ratio remained stable at 11.4%, but during the reporting period, foreign currency assets led to an exchange loss of about 199 million yuan, and interest income declined notably amid easing interest rates.

Performance overview: revenue surpassing 50 billion yuan, profit growth driven by “dual resonance”

Breaking down from the income statement, in 2025, the company’s “volume increase + gross margin uplift + expense ratio decline” formed a combined effect:

• Revenue: 52.553 billion yuan (+22.5%);
• Gross profit: 31.808 billion yuan (+27.7%), gross margin 60.5% (+2.4 percentage points);
• Pre-tax profit: 20.918 billion yuan (+32.5%);
• Net profit attributable to the parent: 15.868 billion yuan (+30.9%), net profit margin approximately 30.2% (an increase from about 28.3% last year).

The company also disclosed in its chairman’s speech that, excluding one-time and non-operating gains and losses, the profit for 2025 was 15.999 billion yuan, indicating that core operating trends and report growth rates are generally aligned.

Category structure: tea beverages remain the largest single category, packaged water recovers growth

In 2025, revenues and proportions by category were as follows (with year-over-year growth in parentheses):

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

The most noteworthy aspect of the structure is that the revenue scale of tea beverages continues to widen the gap with packaged water, becoming the company’s largest source of income; meanwhile, the “recovery growth” of water business is crucial for maintaining overall stability. Management attributes the rebound in water business to water source development, factory opening and sourcing activities, and expansion of product matrix (including high-end ice products).

Segment profitability: tea drinks contribute the largest profit pool, juice profitability shows strong elasticity

The “segment performance” disclosed by the company is based on adjusted pre-tax profit (excluding interest income, financial expenses, and headquarters expenses). In 2025, segment performance totaled 22.318 billion yuan, with:

• Ready-to-drink tea segment: 10.374 billion yuan, accounting for about 48% of segment profit (up from about 45% last year);
• Packaged water: 7.001 billion yuan, about 37% (up from about 31%);
• Functional drinks: 2.696 billion yuan, about 47%;
• Juice: 1.777 billion yuan, about 34%, with a significant increase from last year (about 25%).

From the changes, tea remains the core cash cow with both high scale and high profit; juice, with high revenue growth, shows even greater profit elasticity, reflecting that high-end NFC/“17.5°” product lines are increasingly driving profitability.

Key to gross margin uplift: raw material costs decline coupled with channel order adjustments

The company attributes the gross margin increase mainly to the decline in procurement costs of PET packaging materials, cartons, and sugar. Beyond cost reductions, management emphasizes “controlling the proportion of e-commerce channel sales” to stabilize distributor pricing and channel profitability—indicating that during growth, the company prioritizes a “sustainable pricing system” over simply increasing online volume.

Matching this, depreciation and amortization totaled 2.759 billion yuan (up from 2.445 billion yuan last year), showing ongoing capacity and supply chain investments. However, the management’s focus on price system management during the cost decline phase means that increased depreciation has not suppressed overall profit margins.

Expense side: significant decline in selling expense ratio, administrative costs and equity incentives rise

In 2025, sales and distribution expenses were 9.8 billion yuan, up only 6.8% year-over-year, well below revenue growth, with the expense ratio dropping to 18.6%. The company explains that this is mainly due to:

• A reduction in advertising and promotional expenses after the 2024 “Olympic year”;
• Logistics costs decreasing due to changes in product mix and sales volume.

Administrative expenses reached 2.452 billion yuan, up 25.0% year-over-year, with the expense ratio remaining at 4.7%, though absolute costs increased faster. Notably, share-based payment expenses rose to 77 million yuan (from 6 million yuan last year), corresponding to new employee equity incentives; at the same time, employee benefits totaled about 5.1 billion yuan, reflecting ongoing organizational expansion and incentive investments.

Other gains and losses: interest income declines, exchange losses turn from profit to loss

“Other income and gains” amounted to 1.720 billion yuan, down 19.2% year-over-year, mainly dragged by interest income: in 2025, interest income was 580 million yuan, significantly lower than 866 million yuan last year, reflecting lower yields in the easing interest rate environment.

“Other expenses” increased from 30 million yuan to 291 million yuan, mainly due to two items:

• Exchange losses of about 199 million yuan (compared to exchange gains of 75 million yuan last year);
• Donation expenses of 68 million yuan.
  The company disclosed that at the end of the period, it held foreign currency assets including 1.647 billion HKD and 606 million USD, with foreign exchange exposure causing more direct impacts on the profit and loss statement amid exchange rate fluctuations.

Balance sheet: ample liquidity but more aggressive financial asset allocation, inventory turnover slows

As of the end of 2025, the company’s long-term fixed deposits, restricted funds, pledged deposits, cash, and bank balances totaled about 22.293 billion yuan, a slight increase year-over-year; interest-bearing loans amounted to 4.39 billion yuan, with a capital-debt ratio of 11.4%, roughly stable from last year, maintaining a “high cash, low leverage” structure.

More notably, the composition of financial assets changed: financial assets measured at fair value through profit or loss reached 7.555 billion yuan at period-end, a substantial increase from 1.529 billion yuan last year, indicating the company has increased its holdings of trading financial assets during the interest rate decline cycle to improve capital utilization.

In terms of operating funds, inventory increased to 5.846 billion yuan, up from last year, explained by production stocking and full-industry chain development of tea raw materials, with inventory turnover days rising from 82.3 to 95.5 days; accounts receivable remained low at 598 million yuan, with a turnover period of 4.1 days, showing strong channel collection ability. Contract liabilities (prepayments) at period-end were 4.195 billion yuan, also rising, reflecting prepayments from channels and sales rhythm.

Dividends and investments: planning to pay 11.1 billion yuan in dividends, adjusting IPO fund use to expand capacity

The company plans to pay a final dividend of 0.99 yuan per share, totaling about 11.134 billion yuan; based on full-year net profit attributable to the parent of 15.868 billion yuan, this represents a high level of cash return.

On the investment side, property, plant, and equipment at the end of the period totaled 24.719 billion yuan, with capital commitments of about 4.906 billion yuan, still in the expansion and supply chain strengthening phase. Meanwhile, the company announced that part of the unused funds from the Hong Kong dollar 726 million IPO proceeds will be reallocated from “basic capacity building” to “purchasing production facilities and constructing new factories,” extending the remaining fund usage deadline to the end of 2027—this adjustment emphasizes reducing exchange losses, improving capital efficiency, and reserving space for water source and tea industry investments amid currency fluctuations and imported equipment procurement.

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