Kelon posts massive loss as shares dip
(China Daily)
Updated: 2006-08-15 08:43 Guangdong Kelon Electrical Holdings Ltd yesterday
reported the biggest loss last year of China's listed firms, a result of a halt
in production, a government probe and massive embezzlement by former executives.
Kelon, once the biggest home appliance manufacturer in China, reported that
its net loss grew to 3.7 billion yuan (US$464 million) from 246 million yuan
(US$30.75 million) a year earlier.
Visitors look at Kelon air-conditioners at a
recent electronics fair in Shanghai. Kelon, once the biggest home
appliance manufacturer in China, reported that its net loss last year grew
to 3.7 billion yuan from 246 million yuan a year earlier.
[newsphoto]
| In a statement to the Shenzhen
Stock Exchange, Kelon said its sales fell 11 per cent to 7 billion yuan (US$875
million) from 7.9 billion yuan (US$987 million) last year.
The company's statement said that the huge loss was mainly a result of the
halt in production after the China Securities Regulatory Commission (CSRC)
launched a probe last April.
Kelon halted about half of its refrigerator production and 70 per cent of air
conditioner output between May and September, the hot season for sales.
Meanwhile, the probe squeezed Kelon's cash flow by undermining the confidence
of financial institutions, suppliers and sales agents in the company.
The CSRC's five-month investigation revealed that Kelon's sales were
exaggerated by 122.1 million yuan (US$15.25 million) between 2002 and 2004,
adding 33 million yuan (US$ 4.1 million) to the company's net income, the
company said in the statement.
As a result, the CSRC fined Kelon 600,000 yuan (US$75,000) last month, and
penalties ranging from 50,000 yuan (US$6,250) to 300,000 yuan (US$37,500) were
slapped on the company's top management .
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