CTG Duty Free’s Sanya International Duty Free Shopping Complex in Hainan.

CTG Duty Free has reported a decrease in income and profits year-over-year (yoy) in H1 2024, according to preliminary unaudited interim results, although revenue from its China departure and arrival duty free stores was up by more than 100%.

According to the results released by the company on 15 July, CTG Duty Free’s total operating income decreased by 12.81% to almost RMB 31.265 billion (approximately US$4.349 billion).

The unaudited preliminary accounting data for the six months ended 30 June 2024 also shows that operating profit fell by 8.47% to almost RMB 4.533 billion (approx. US$631m).

During the reporting period, the gross profit margin of the company’s principal business (China Duty Free Group) was 32.94%, representing an increase of 2.62 percentage points compared to the same period last year, demonstrating a continued improvement.

CTG Duty Free focused on ‘steady growth, promoting reform and striving development’ during the reporting period in the face of a ‘complex and severe external market environment’, says the report.

The company noted, however, that it has benefitted from the continuing recovery of international flights and passenger flow.

Recent research by travel intelligence specialists ForwardKeys revealed that outbound Chinese travel is gradually returning to pre-pandemic levels.

In the first quarter of 2024, the number of issued flight tickets showed a steady increase reaching just 32% under Q1 2019 levels.

The CTG Duty Free H1 2024 announcement also highlights that the revenue generated from its China departure and arrival duty free stores increased by more than 100% yoy, and that profitability ‘continued to improve’.

Among them, revenue from duty free stores at the airports in Beijing (including Capital International Airport and Daxing International Airport) increased by more than 200% yoy, and revenue from duty free stores at  airports in Shanghai (including Pudong International Airport and Hongqiao International Airport) nearly doubled, with their net profits both increasning significantly, according to the statement.

The company’s announcement reflects research that shows shopping is still a ‘must’ for China outbound travellers.

Dragon Trail International’s 10th Chinese Traveler Sentiment Report (released in April), which quizzed mainland Chinese travellers about their travel plans and preferences, shows that respondents are seeking value for money when they travel, but are still willing to spend.

Around half of those surveyed budget RMB10-30k (US$1,383-4,184) for an international trip. Meanwhile, nearly two-thirds spend at least RMB2,000 (US$276) on shopping during a single outbound trip, with the median spend reaching RMB5,000 (US$691).

Local foods and souvenirs are the most popular shopping categories at 73% and 61% respectively, followed by cosmetics (37%) and clothing, shoes, and bags (33%). A combination of lower prices and high quality stood out to shoppers, as did friendly sales staff.

Dragon Trail International: April 2024 Chinese Traveler Sentiment Report. Source: Dragon Trail.

Circling back to the CTG Duty Free H1 2024 interim results announcement, the importance of enhancing service quality and efficiency to ‘further’ consolidate the company’s position in Hainan’s offshore duty free market is also highlighted.

CTG Duty Free also references its vision to promote its overseas operations, with the opening of the duty free stores of Adora Magic City cruise, the Qeelin boutiques at Singapore Changi and Hong Kong International Airports, and wining the bid to operate the MCM boutique at Changi.

In China, CTG Duty Free won the operation rights of the departure duty free store at Guangzhou Baiyun International Airport Terminal 1 and the departure duty free store at Kunming Changshui International Airport.

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