UPDATE 1-China's GOME Q2 net triples from low base, sales up
(Adds details, executive comments)
HONG KONG, Aug 12 (Reuters) - GOME Electrical Appliances Holding (0493.HK), China's top electronics retailer, nearly tripled its quarterly profit on Tuesday thanks to higher sales and a low comparison base caused by huge impairment losses a year ago.
Analysts predict GOME -- which operates over 800 outlets across China -- will continue to see improvements in operating efficiency in the second half, but say gloom could linger in 2009 as suppliers tighten credit terms due to slowdown fears.
In addition, corporate governance issues linger over billionaire Chairman Huang Guangyu's investments in China's property market.
The Beijing-based retailer competes with U.S. giants Wal-Mart (WMT.N) and Best Buy (BBY.N), as well as domestic rival Suning Appliance Co (002024.SZ) for a slice of China's $1.3 trillion retail market.
GOME earned 637 million yuan ($92.8 million) for the three months ended-June, based on Reuters calculations, versus 226.17 million yuan a year earlier when it booked 410 million yuan impairment losses arising from convertible bonds.
One-off incidents, including the earthquake in China's Sichuan province in May and flooding in southern China have slowed down revenue growth in the second quarter, GOME said.
"There have been tragedies this year such as the Sichuan earthquake," GOME's executive director and president Chen Xiao told reporters.
"But they already happened -- we are optimistic about China's retail market for the second half of the year."
First half net profit also nearly tripled to 1.15 billion yuan from 395.39 million yuan last year, the company said in a statement. Sales during the first-half rose roughly 18 percent to 24.9 billion yuan.
For a full-earnings statement, please click here
The interim earnings result was about half of GOME's expected full-year performance.
STORE IMPROVEMENTS
GOME, which plans to spend up to 2 billion yuan this year to improve the firm's existing stores, is expected to book roughly 2.3 billion yuan in 2008 profit, more than doubling the 1.13 billion yuan it booked in 2007. Continued...
