-- Company expects consumer sentiment in China to continue to be affected by volatility in the global economy.

-- Profit from its retail division fell 10% in 2011 as rising inflation and market volatility hurt consumer sentiment.

(Adds quotes of company's chief financial controller on capital expenditure and acquisitions in the 8th and 9th paragraphs)

HONG KONG (Dow Jones)--Blue-chip consumer goods conglomerate China Resources Enterprise Ltd. (0291.HK) Wednesday reported a 50% drop in its 2011 net profit, as its year-earlier earnings were boosted by a one-off gain from the disposal of its stake in a clothing-distribution joint venture.

The conglomerate, which flagged a challenging outlook for this year as the global economic turmoil and local inflation continue to damp spending by consumers, said it will, however, continue to open more stores to expand its market share.

After the divestment, China's largest beer producer by sales volume has been focusing on increasing the market share of its core businesses--retail, food, brewery and beverages--in the country's key cities.

China's biggest supermarket operator said its net profit for the 12 months ended Dec. 31 fell to HK$2.83 billion (US$363 million) from HK$5.67 billion in 2010.

Excluding gains from asset revaluations and one-off disposals, the group said its underlying profit was down 0.3% compared to 2010, but didn't provide specific data.

In February 2010, China Resources disposed of its stake in a clothing-distribution joint venture with Esprit for HK$3.88 billion in cash, which accounted for more than half of its 2010 net profit.

"In 2012, we expect the operating environment in China to remain challenging, with consumer sentiment still affected by volatility in the global economy, primarily the unfolding sovereign debt crisis in Europe," Chairman Qiao Shibo said in a statement.

Frank Lai, the group's chief financial controller, told a press conference that it has allocated HK$8 billion for capital expenditure this year. The amount will mainly cover acquisitions and the opening of more than 500 new retail stores in China, he added.

The conglomerate is still interested in acquiring the brewery operations of Chinese beer maker Kingway Brewery Holdings Ltd.(0124.HK), a deal that many of its competitors are also looking at, Lai said. But he declined to disclose the progress of China Resources' negotiation with Kingway.

The company's revenue rose 27% to HK$110.16 billion from HK$86.73 billion in 2010.

China Resources Enterprise said its retail division recorded a profit of HK$1.74 billion last year, down 10% from a year earlier, as consumer sentiment was battered by lackluster stock market performance and rising inflation in China. It said higher minimum wage levels in various regions in the country also pressured its operations.

The company operated around 4,000 hypermarkets, superstores, supermarkets and convenience stores in China at the end of December.

Net profit contributed by its beer division, which has a market share of more than 20% in China and includes a majority stake in a beer-making venture with SAB Miller PLC under the Snow brand, rose 15% to HK$785 million, as the country's increasing appetite for the drink more than offset rising costs of labour and raw materials.

China Resources, which operated around 80 breweries in China as of Dec. 31, said its beer sales volume rose 10% to 10.24 million kiloliters.

Shares in the conglomerate was down 1.0% at HK$29.45 Tuesday, while the benchmark Hang Seng Index dropped 0.2%.