Mainland TV maker's interim earnings buoyed by $44m foreign exchange gain Mainland television maker Skyworth Digital Holdings yesterday blamed cut-throat market competition for a 75.3 per cent decline in net profit for the six months to September, the latest setback for the scandal-hit firm still suspended from trading on the Hong Kong stock exchange. The Shenzhen-based company, one of China's top five television makers, said net profit fell to $43 million from $176 million a year earlier as the company faced stiff competition in its core domestic market. The news could have been worse as the net profit tally included a $44 million foreign exchange gain. Overall, revenue from the firm's 'other operating income' rose to $77 million from $38 million during the period. 'A significant increase in cost of sales resulting from cut-throat market competition, the increase in prices of raw materials, and the drive to increase Skyworth's brand image have had an adverse impact on profits,' the company said. Skyworth pumped an extra $219 million into selling and distribution expenses as it sought to stimulate sales and increase the brand's exposure through advertising and other promotional activities. Overall, selling and distribution expenses rose 46.5 per cent to $690 million. Meanwhile, turnover increased 6.8 per cent to $4.64 billion while gross profit rose 18.7 per cent to $786 million. Skyworth has endured a torrid news cycle since the arrest of then chairman Stephen Wong Wang-san and 14 employees in November last year on charges of embezzlement and fraud brought by the Independent Commission Against Corruption. Trading in the company was suspended at that time with the stock priced at $2.67. Skyworth applied to the bourse to resume trading earlier this month, although chief financial officer Frederick Leung Chi-ching acknowledged 'at this point we don't know when it will happen'. Yesterday, the company was putting a brave face on the latest results, describing the increased cost of sales as a 'necessary transition', and cited 'strong global demand for flat-panel TVs' and the 'increasing popularity of digital broadcasting' as cause for optimism. Mr Leung said the company remained on target to ship 9.5 million televisions in the full year, having sold 3.89 million sets in the first half. 'Our global distribution will also increase in 2006 due to growing demand,' he said.