Heavy loss threatens to overwhelm glassmaker
Luoyang Glass yesterday reported an accumulated loss of 969 million yuan and net current liabilities of 498 million yuan last year, raising concerns about the group's ability to continue trading.
Auditor KPMG said there was now a fundamental uncertainty about the future of the group which has posted losses for at least 10 years after listing on the Hong Kong stock exchange in 1994.
The firm said its losses were due to a 34 per cent rise in the production cost of glass while prices for its products slumped 25 per cent year on year.
It said the losses were part of an overall decline in the industry which has recorded falls of more than 90 per cent on high oil, coal, water and electricity costs.
The glass producer has gained permission from a financial institution to delay repayment of a loan of 861 million yuan, due to be cleared this year.
In a statement the group said that it was aiming to expand its export business to boost sales and profits this year.
'More than 50 production lines have been built since 2003 and it is forecast that five more will be built this year,' the group said in its statement.
The glass industry has been through a difficult period over the past two years following the implementation of macroeconomic policies in 2004 by the central government aimed at curbing over-investment in the sector.
Another glassmaker, Hong Kong-listed China Glass, which is due to announce its annual results today, posted a profit warning earlier this year.