(Yicai) Feb. 21 -- China’s Luckin Coffee has no plans to raise prices despite the surging cost of beans, Chief Executive Officer Guo Jinyi said, after the company reported a 38 percent increase in annual revenue to USD4.7 billion.

Luckin's investments across the entire industry chain, as well as its scale and efficiency, have to some extent offset the impact on higher costs, Guo, who is also chairman of the Xiamen-based company, said on an earnings conference call yesterday.

Since late last year, many coffee houses and bean traders, including Japan's Ajinomoto and Switzerland's Nestlé, have announced plans to hike product prices after lower harvests due to bad weather in major coffee-producing countries such as Brazil and Vietnam sent bean prices soaring.

Coffee C Futures, the benchmark for Arabica coffee traded on New York's Intercontinental Exchange, broke through USD4.30 per pound on Feb. 11, reaching a 47-year high. Prices have more than doubled in the past 12 months.

Luckin intends to go on selling coffee for as little as CNY9.9 (USD1.40) a cup, Guo said.

Its domestic rival Cotti Coffee also intends to avoid price increases, as it aims to reach 50,000 outlets by December, Chief Strategy Officer Li Yingbo has said.

Luckin’s net income rose 3 percent to CNY2.9 billion (USD405 million) in the 12 months ended Dec. 31, its annual earnings report showed yesterday. The chain opened almost 6,100 new outlets last year for a total of 22,340, of which 14,591 were self-operated stores and 7,749 franchises.

It operated 51 stores in Singapore and five in Hong Kong as of December. Additionally, the company launched a franchising model in Malaysia last month with two stores.

Luckin’s shares, which trade over-the-counter in New York, climbed 7.8 percent yesterday to close at USD32 each. The stock is up 25 percent so far this year.

“2024 has been pivotal for us, demonstrating our robust growth and expanded leadership in the coffee industry amid a dynamic market environment,” Guo said.

“Looking ahead, we are strategically positioned to capitalize on the growth opportunities in China’s thriving coffee market, bolstered by our unparalleled scale and powerful supply chain, enabling us to consistently deliver innovative, high-quality products to our growing clientele,” he added.

Editor: Emmi Laine