UPDATE 1-China's GOME Q1 net profit more than triples
(Adds details, executive comments)
HONG KONG, May 27 (Reuters) - GOME Electrical Appliances Holding Ltd. (0493.HK)2932.HK, China's top electronics retailer, more than tripled its first-quarter profit thanks to stronger margins, finance income and its growing store network.
Beijing-based GOME, which operates over 700 outlets across China, competes with Chinese rival Suning Appliance Co (002024.SZ) and U.S. behemoths Wal-Mart (WMT.N) and Best Buy (BBY.N) for its slice of China's hotly contested $1.3 trillion retail market, Asia's second-largest.
The company, which has rapidly grown market share in recent years by buying out smaller rivals, plans to spearhead consolidation in the consumer electronics sector, which is expected to hit $100 billion this year. It aims to control a fifth of China's consumer electronics market by 2011.
GOME said on Tuesday it earned nearly 513 million yuan ($73.93 million) for the three months ended March, compared with 169.2 million yuan a year ago.
The firm is expected to book roughly 2.3 billion yuan in 2008 profit, more than doubling the 1.13 billion yuan it earned in 2007, according to nine analysts polled by Reuters.
The first-quarter gains follow a more than 20 percent leap in revenue to roughly 12.2 billion yuan. The firm also booked nearly 158.1 million yuan income from financial items, up from 62.5 million in the same period last year.
Its operating margin increased to 4.37 percent from 3.27 percent last year.
For a full earnings statement, please click on: here
"This quarter sales were up in almost every product category, including audio and visual products and refrigerators and IT products," GOME's president Chen Xiao told reporters.
Chen added that this month's deadly earthquake in Sichuan province, which has killed more than 60,000, would have a minimal impact on the firm, as GOME does not have stores in Wenchuan county, near the quake's epicentre.
GOME's 2008 capital expenditure could reach 2 billion yuan, up from 1.6 billion yuan in 2007, to improve the firm's existing stores, CFO Zhou Yafei told reporters.
GOME is also is planning a major expansion of its cellphone shops this year to increase handset sales. It bought two regional cellphone chains with more than 40 stores earlier this year, and plans to open 300 to 450 new shops of its own by year-end.
China is the world's largest mobile phone market, with 547 million users at the end of last year.
In February, a subsidiary of the firm paid 541 million yuan for a controlling stake in Sanlian Commerce Co (600898.SS), a retailer in eastern China's Shandong province.
Last December it lent 3.6 billion yuan to a third party to buy the Dazhong Electrical Appliances chain, China's No. 4 appliance retailer.
Shares in GOME lost 9.7 percent from January through March, outperforming the 17.8 percent fall on Hong Kong's benchmark Hang Seng Index .HSI. The stock closed down 0.23 percent on Tuesday ahead of the earnings announcement. (Reporting by Joseph Chaney, editing by Will Waterman)
