China Resources Logic, a mainland semiconductor and air-conditioner compressor maker, saw its first-half net profit drop 34 per cent largely due to a downturn in the compressor industry.
Conglomerate China Resources Enterprise's technology flagship reported yesterday that its interim net earnings dropped to HK$142.18 million for the six months ended June from HK$215.5 million in the same period last year, on turnover that decreased 8 per cent to HK$1.64 billion.
The compressor business, which accounted for 53 per cent of total sales, suffered from a 48 per cent fall in operating profit to HK$136 million, on a 16 per cent drop in sales to HK$866 million.
'The profit margin of compressor products decreased because of the cyclical excess capacity in the industry and the increased production cost, and this situation will last for two to three more years,' said CR Logic chief executive Wang Guoping.
The semiconductor business, which accounted for 47 per cent of total sales, saw operating profit grow 12 per cent to HK$111 million, on an 18 per cent rise in turnover to HK$771 million during the first half, as its operating profit margin narrowed to 14 per cent from 15 per cent a year ago due to competition in the sector. Its chips are mainly used in consumer electronic and telecommunication devices.
As China rises up the value chain, it has seen its semiconductor industry grow 3.44 times to HK$396 billion last year from HK$115 billion in 2000. CR Logic chairman Zhu Jin-kun expects it to reach HK$649 billion by next year.