Citic Ltd warns interim profits to fall by up to 50 per cent
Hong Kong subsidiary of global Chinese conglomerate blames the sluggish stock market and depreciating renminbi
Chinese conglomerate Citic Ltd, a Hong Kong-listed unit of Chinese state-owned giant Citic Group, has warned that its profits for the first half of this year could be as much as 50 per cent lower than the same period last year, in a notice filed with the Hong Kong Stock Exchange.
The company cited the sluggish Chinese stock market and the fall in the value of the renmnibi as the main reasons for the decline.
Citic Group owns businesses in the financial services, resources and energy, manufacturing, engineering contracting and real estate sectors among others.
It ranked 156 in 2016’s Fortune 500, and claims to be China’s largest conglomerate
In the statement, Citic Ltd said that according to a preliminary assessment it expected to record a decline in net profit of approximately 40-50 per cent for the six months ending 30 June 2016.
In the first half of last year, Citic Ltd recorded a profit of HK$37.7 billion.
The statement said that the sluggish Chinese stock market had affected the activities of its subsidiary, the investment bank, China Citic, which would affect the parent company’s performance.
The Shanghai Composite Index is down 14.87 per cent so far this year.
Another reason for the warning was the decline in value of the renminbi.
“Given Citic Limited’s main operations and assets are in mainland China, the depreciation
of the renminbi in the first half of 2016 has meant that company’s net profit, when translated
into Hong Kong dollars, is less,” the statement said.
The renminbi has dropped by 2.61 per cent against the Hong Kong dollar in the year to date.
Two other reasons for the decline in profits were given.
That Citic had sold a stake in Citic Securities, in the first half of 2015, something that would not repeated this year. And that it had restructured some related tax payments and other expenses for the proposed sale of its mainland China residential property projects.