Country Garden chalks up first interim loss since 2007, reporting US$6.72 billion in the red as China’s property problems mount
- Country Garden’s cash balance shrank 21 per cent to 101.12 billion yuan as it grapples with missed payments
- President says if financial situation worsens, the group may default on certain borrowings
Country Garden, one of China’s largest property developers, reported a record net loss for the first half in 2023, its first slip into the red since publicly listing in 2007 as the company teeters towards default, underscoring the financial strains in the country’s property sector.
The Chinese builder reported a net loss attributable to owners of the company of 48.9 billion yuan (US$6.72 billion), compared with a gain of 612 million yuan a year earlier, according to a filing to the Hong Kong stock exchange late on Wednesday.
The cash position will be insufficient to service the company’s 1.19 trillion yuan of liabilities, although the sum is 3.3 per cent lower than a year ago. Short term debt obligations, or those maturing in less than a year, rose 31 per cent to 69.52 billion yuan, highlighting the urgency of the situation.
The wobbles in China’s property industry, once a pillar in the nation’s US$18 trillion economy, are already inflicting losses elsewhere. Growth has tapered and could soon be a drag on the economy, while developers fell behind on their debt repayments.
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The company’s president, Mo Bin, said in the filing that it will continue to negotiate with banks and other bondholders to delay repayments.