China Glass Holdings issued a profit warning yesterday, just 24 hours after holding a press conference to announce how it had acquired a controlling interest in seven rival domestic companies and that it aimed to become the country's largest glass exporter. In a statement to the Hong Kong stock exchange the company, whose stock had been suspended from trading for three days, said it would record a 'substantial decrease' in profit for last year because of a downturn in the mainland's glass industry. The downturn had affected the operating performance of enterprises across the entire industry, the statement said, without giving financial details. China Glass added that it had reported a profit of 64.82 million yuan for 2004 and 16.03 million yuan for the first half of last year. On Tuesday the company said it would pay 416 million yuan through a joint venture with subsidiaries of Legend Holdings and Pilkington for control of the seven rival firms. At the time, board member Zhang Zhao Hang admitted that the industry was subject to cycles, adding that 2004 and last year had marked a low point. He made no mention of last year's figures, although he said he was optimistic profit 'would not drop drastically' this year. However, his optimism was not shared yesterday by Jeffery Cheng Pik-hoi, an analyst at Daiwa Research Institute, who said: 'There is no good news for the China glass industry in the next six months. The flood of production lines will lead to an oversupply problem.' Nevertheless, China Glass is banking on increased demand from the property and car sectors this year as they recover from the effects of the government's macroeconomic measures. China Glass blamed high oil and raw material prices for a collapse in its margins. The firm recorded a 56.9 per cent plunge in its earnings in September last year, when it reported its first profit result since its listing in Hong Kong in June last year. During the same period, mainland glassmaker, Zhejiang Glass, posted a drop in net profit of 36.53 per cent to 69.73 million yuan. China Glass will operate 14 production lines after its acquisitions, up from three, and will aim to increase the amount it exports from 34 per cent of total output now.