GDI feels the pain of Asia turmoil

The Guangdong Investment (GDI) group of companies has announced mixed results in the six months to June 30 amid slowing demand and regional financial turmoil.

Guangdong Investment - the listed overseas window company of the Guangdong municipal government - saw its profit slump 67.9 per cent to $111 million, hit by a $50 million provision made for long-term investments.

The results would have been lower were it not for the $28.62 million exceptional gain on the cancellation of convertible bonds.

Turnover fell 8.8 per cent to $3.1 billion while operating profit plummeted 41.3 per cent to $220.23 million.

Earnings per share were 3.5 cents, down sharply from 14.8 cents a year ago. An interim dividend of 1.5 cents a share will be paid against four cents previously.

Guangdong Tannery, the cow-hide and sheep-skin processing arm of Guangdong Investment, posted a 77.47 per cent slide in net profit to $5.41 million in the six months to June 30, due to slow demand for leather products and a prolonged correction in leather prices.

The company said the worst could be over for the industry and the leather market was unlikely to be hit further.

Operating profit slumped 70.7 per cent to $7.53 million despite a 25.5 per cent increase in turnover to $381.34 million in the first half.

Earnings per share dropped to one cent, down from five cents in the last corresponding period. No interim dividend will be paid during the period.

The firm's gearing ratio of net banking and other borrowings to shareholder's equity was 22 per cent at June 30.

Its brewery arm, Guangdong Brewery Holdings, reported a 25.7 per cent increase in profit to $47.73 million in the first half of this year but warned of a difficult second half.

The results came amid stiff competition in the mainland brewing industry, with breweries launching price-cutting campaigns to boost market share.

The company anticipated prolonged sluggishness of domestic demand and increasing price-cutting competition from rivals.

'There are no signs the operating environment will improve in the second half,' the company said.

Turnover rose 10.2 per cent to $265.67 million.

Earnings per share were 3.8 cents against 4.2 cents previously with an interim dividend of 0.5 cent a share.

The company produced 69,600 tonnes of Kingway beer at the main plant in the first half.