Chinese electronics retailer Gome reports 1.6pc drop in interim profit amid increased financing costs

Gome Electrical Appliances Holding, China’s largest electronics retailer, reported a 1.6 per cent drop in net profit for the first half of 2017 on Monday, as a result of its increased financing costs during the period.

The company said its interim profit for the half year reached 122 million yuan (US$18.3 million), or 0.6 fen per share. The result was on track to miss a Reuters analysts’ consensus estimate of 733.5 million yuan net profit for the full year.

The company said the result was negatively impacted by increased interest payments that amounted to 323 million yuan for the first half, as total borrowings increased 150 per cent to 16 billion yuan. The borrowings were mainly used to fund the company’s working capital, capital expenditure and cash for investments. Revenue reached 38 billion yuan, up 7.8 per cent year on year.

The company did not declare an interim dividend.

During the period, the company saw its online to offline total gross merchandise volume

increase by 22.9 per cent on year, with 54.2 per cent growth in e-commerce amid its efforts to expand its online presence in recent years.

Looking ahead, the company said it would continue to enhance its new retail ecosystem by integrating the online and offline resources and leveraging its strong supply chain system, logistics technology, internet technology and big data analysis.