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Changhong hit hard by quake

By Diao Ying (China Daily)
Updated: 2008-05-30 09:06

The earthquake that devastated Sichuan province on May 12 has caused losses totaling 149 million yuan for major domestic home appliance maker Sichuan Changhong Electric Co, a company announcement to the Shanghai Stock Exchange said.

The losses were mainly of fixed and current assets, the company said without elaborating. But losses incurred from damage to Changhong's factories and injuries to its staff are unsubstantial given the firm's size. Its net profit was more than 336 million yuan in 2007.

A Changhong Electric Co facility in Mianyang, Sichuan province. [Agencies]

Production in Mianyang, a city in Sichuan near the quake's epicenter, was suspended for several days after the disaster. But the company had arranged for factories outside Sichuan to work overtime to meet demand, the company said in an earlier announcement.

One employee died and 12 were injured in the quake, the company announced on Wednesday.

Production lines for goods, including air conditioners and cell phones, have mostly resumed normal operations, and the company is finishing remaining repairs to buildings and machinery, it added.

The firm, which is the country's second largest television set maker, on Friday resumed construction of facilities to expand production capacity of plasma display panels, which it had suspended after the quake.

Perhaps the gravest problem the company now faces is that it is headquartered in Mianyang, where the banks of one of the biggest "quake lakes", Tangjiashan, are threatening to burst, causing a flash flood.

Authorities are now developing an evacuation plan for the 150,000 people in areas threatened by the lake, which was formed when landslides blocked the Jianjiang River above the town and Beichuan county.

Changhong's factories and staff residences wouldn't be affected by the evacuation, it said on Wednesday.

"There would be some losses, but it won't have a huge impact on production. The company is busily repairing factories and equipment damaged in the quake," the announcement said.

China Galaxy Securities Co electronics analyst Zhu Lijun said: "The quake will probably make it a difficult year for Changhong. The loss the firm reported wasn't big, but the concern is the quake might affect the transportation of raw materials and the supply of electricity," Bloomberg quoted Zhu as saying.

Changhong said earlier it was confident the quake wouldn't prevent it from reaching its 2008 target, announced in April as 30 billion yuan in sales.

The firm's shares closed at 5.99 yuan yesterday, down 2.76 percent from the previous day, compared with a 1.66 percent drop in the benchmark Shanghai Composite Index.