Shede Spirits Co.,Ltd. (ASX: 600702) has issued a profit warning, projecting its first-half net profit attributable to shareholders will range between 135 million and 175 million yuan. This represents a significant year-on-year decline of 60.52% to 69.55%.

The company attributes the anticipated sharp drop in earnings to the ongoing challenging conditions within the baijiu industry during the first half of 2026. The sector remains in a period of deep adjustment, characterized by intense competition within a saturated market, sluggish consumer demand, and heightened friction between traditional and emerging sales channels, all of which continue to put pressure on product sales.

In response to these industry headwinds, the company has proactively adhered to a core strategy of stabilizing prices, controlling inventory, and boosting sell-through. This has involved moderating shipments to actively support distributors in reducing their stockpiles and maintaining stable market prices, ensuring the healthy operation of both the market and the distributor network. Consequently, the company expects its first-half operating revenue to decrease by approximately 16% compared to the same period last year.

Simultaneously, the company reiterated its commitment to a long-term development philosophy. It has intensified foundational market activities and employed refined operations in an effort to increase its regional market share. Furthermore, it has ramped up efforts in consumer education to enhance consumer experience and appreciation of its aged spirits' quality and culture. These initiatives, coupled with a temporary increase in market investment, have resulted in sales and marketing expenses remaining at a relatively high level during the first half of the year.