Tsingtao Beer is displayed on the table in Chengdu, Aug 2,2008.[Photo/CFP]

BEIJING-- Tsingtao Brewery Co, China's second-largest brewer by volume, said on Sunday its first-half profits rose 21.62 percent year-on-year due to higher sales volume and expanded production capacity.

Net profits rose to 989.9 million yuan ($155 million), or 0.73 yuan a share, from 813.9 million yuan, or 0.6 yuan, one year earlier, the brewer said in a statement filed to the Shanghai Stock Exchange.

Sales climbed 21.1 percent to 11.87 billion yuan. The company sold 3.75 million kiloliters of beer during the first half, a rise of 20.6 percent year-on-year.

The brewer increased its production capacity and introduced diversified products to cater to growing demand in the world's most populous country.

The company aims for annual beer sales of 10 million kiloliters in 2014, the statement said.

However, the company said exchange rate fluctuations are likely to affect its margins as it relies on imported barley to brew beer.

The country's beer output increased 11.4 percent from one year earlier to 23.5 million kiloliters during the first half, according to data from the National Bureau of Statistics.