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China Unicom insists turnaround soon, after record drop in interim profit

Firm hurt by higher sales costs and network, operations and support expenses, but chairman says its ‘most difficult period will soon be over’

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China Unicom chairman Wang Xiaochu (L), and chief financial officer Li Fushen, at the company’s interim results announcement in Hong Kong on Wednesday. Photo: May Tse

China Unicom is aiming for a gradual turnaround on the back of an aggressive 4G network roll-out, following the steepest first-half net profit decline reported by the company since it was listed in Hong Kong in 2000.

“The company’s most difficult period will soon be over,” insisted Unicom chairman and chief executive Wang Xiaochu at a press conference on Wednesday.

Unicom, which issued consecutive profit warnings in the past two quarters, posted a 79.6 per cent fall in its interim net profit to 1.43 billion yuan (HK$1.67 billion), down from 6.99 billion yuan in the same period last year, due to higher sales and marketing costs as well as network, operations and support expenses.

The company’s previous record six-month profit plunge was a 61.8 per cent year on year drop to 2.53 billion yuan in the first half of 2010.

Its interim earnings before interest, taxes, depreciation and amortisation – a measure of a firm’s operating profitability – decreased 18 per cent year on year to 41.28 billion yuan.

Interim revenue slipped 3.1 per cent to 140.25 billion yuan from 144.68 billion yuan a year earlier.

The company braved short-term profit pressure, strengthened its fundamental capabilities and increased cost initiatives as appropriate to strive for a gradual turnaround
Wang Xiaochu, China Unicom chairman and chief executive
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