|
Changhong, China's top television maker, said yesterday it expects to post a huge loss for the year 2004 after writing off debts from its US distributor as well as short-term investment losses.
Sichuan Changhong Electric Appliance Co Ltd issued a statement on the scale of its potential loss yesterday following pressure from the Shanghai Stock Exchange.
Changhong shares were suspended from trade on Monday by the stock exchange, which said the company "failed to make public important information" following widespread media reports on details of its loss.
According to the statement, the company is prepared to put aside up to US$310 million to cover debts from APEX, its distributor in the United States.
The distributor owes Changhong US$467.5 million by December 25. But the US company is now in a big loss as its business was affected by the imposition of patent fees and US anti-dumping measures on Chinese TV sets.
"It is difficult to collect the total sum from APEX," Changhong said in the statement.
Estimates show the TV maker could possibly recoup US$150 million from APEX's assets, leaving US$310 million in uncovered debt.
The manufacturer will also earmark 182.8 million yuan (US$22.1 million) for potential losses in bond trading entrusted to scandal-hit brokerage China Southern Securities, the statement said.
"Due to these factors, the company forecasts a big loss in 2004," Changhong said.
The specific scale of loss and the impact on the company's business performance will be released in its 2004 annual report, Changhong said.
The company is seeking measures to reduce losses, it said.
A loss this year will contrast with its previously posted net profit of 241.65 million yuan (US$29.19 million) last year.
"The bad debt from APEX, as well as other risks like overstock and poor investment, will affect Changhong long term, and it is expected to suffer losses during the next two years," said Chen Yuanwang, an industry analyst from China Securities.
During the past year, Changhong's business performance worsened among stiffer domestic competition.
In the first nine months of this year, Changhong posted a 47 percent slide in earnings to 82.79 million yuan (US$10 million) from the same period a year ago.
Its Shanghai-listed yuan-denominated A shares, open to selected foreign investors, have shed half their value to end at 4.93 yuan (60 US cents) on Friday from their 2004 peak in mid-February, underperforming a 25 percent fall on the broader market.
"China's TV makers are battling another difficult year due to nationwide overcapacity and a persistent price war in the industry," Chen said.
But with the industry's restructuring and technology innovations, the TV manufacturing industry is likely to regain rapid growth in late 2006, he expects.
(China Daily December 29, 2004)
|
