Nongfu Spring's shares plummet by more than 12% after the beverages manufacturer reports a decrease in profit growth.

• Nongfu Spring's shares fell after the company reported a significant decrease in its half-year profit growth.
• In the first half of 2023, the company's net income grew 23.3% year on year to 6.24 billion yuan ($876 million), compared to 8% growth in the first half of 2023.

On Wednesday, the shares of China's largest bottled water producer, Nongfu Spring, declined after the company reported a significant decrease in profit growth during the first half of the year.

The stock price of Nongfu Spring in Hong Kong, which has decreased by 41% this year, fell by 12% on Wednesday, according to LSEG data.

In the first half of 2023, the company's net income grew 23.3% year on year to 6.24 billion yuan ($876 million), compared to 8% growth in the first half of 2023.

Nongfu stated in its exchange filing that increased competition, an online backlash, and "malicious defamation" negatively impacted sales.

The Group's brand reputation and sales of packaged drinking water products have been negatively affected by online public opinions in the first half of the year.

Chinese internet users who are nationalists have accused Nongfu of having images of Japanese religious structures on its green tea packaging, resulting in calls for boycotts. Some 7-Eleven stores have stopped selling Nongfu products due to the controversy. Nongfu had previously stated that the architectural patterns were influenced by Chinese temples.

The company vowed to "strongly pursue legal action" against those who have "defamed" the brand.

The beverages industry is becoming increasingly competitive, while the company reported that domestic demand is gradually improving.

The revenue from Nongfu's packaged drinking water products, which account for 38.5% of its total revenue, decreased by 18.3% from 10.44 billion yuan to 8.53 billion yuan in the same period last year.

The percentage of revenue generated from tea beverage products, accounting for 38% of the company's total revenue, increased by almost 60%.