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SCMP Reporter

Home appliance manufacturer expects a loss of 12m yuan in the third quarter

Guangdong Kelon Electrical Holdings, a mainland home appliance maker, has estimated a 12 million yuan loss for the third quarter, instead of a slight profit it previously stated  as unexpected cool weather crimp air-conditioner sales.

'As a result of the decrease in sales volume due to changes in weather, the company could not meet its expected sales target of its air-conditioner products,' Kelon said.

'However, the company still had to bear the corresponding fixed costs, resulting in losses in the third quarter.'

Shenzhen and Hong Kong-listed Kelon also said that for the first three quarters of this year, it will probably suffer a combined loss of 48 million yuan, compared  with a 1.3 billion  yuan loss a year ago.

Kelon's Shenzhen-listed shares fell 1.82 per cent to close at 2.70 yuan yesterday. The stock has gained 26.76 per cent this year.

Trading in Kelon's Hong Kong-listed shares has been suspended since June 16 last year.

The company's  Shenzhen-listed shares may also be suspended or delisted under listing rules if it reports a net loss for this year, which would be the firm's third consecutive  annual loss.

Kelon, which makes refrigerators and air conditioners, has been hit by a corporate scandal involving embezzlement by its former chairman Gu Chujun.

Gu was dismissed as chairman in August last year and arrested for alleged economic crimes in the following month. The trial is expected to  begin next month, according to mainland media.

The company reported a  loss of more than three billion yuan for  last year, when it set aside about 763 million yuan as provision for bad debt.

The provision included 374 million yuan to cover the funds allegedly embezzled by  Gu, who has since sold his 26.43 per cent stake in the company to a unit of state-owned conglomerate Hisense Group.

As of June 30, Kelon's liabilities exceeded its assets by 3.27 billion yuan and it had 1.45 billion yuan of overdue short-term loans. The company said it was negotiating its debts with creditors.

The company and its subsidiaries are facing 93 lawsuits involving  claims of about 1.1 billion yuan.

Eighty-one cases involving claims of 596 million yuan have been brought by banks and former customers against the company while 12 cases involving 503 million yuan have been initiated by Kelon.



Kelon reverses forecasts as sales fall amid cool weather