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Gome profit rises 38%

(China Daily/Agencies)
Updated: 2008-04-18 14:09

Gome Electrical Appliances Holdings Ltd, China's second biggest electronics retailer, said 2007 profit rose 38 percent as the country's booming economy spurred consumption.
 

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Net income rose to 1.13 billion yuan ($161.61 million), or 0.35 yuan a share, from 819 million yuan, or 0.34 yuan, in the previous year, Hong Kong-listed Gome said in a statement to the city's stock exchange yesterday.

The retailer, with 726 stores at the end of last year, plans to open 120 outlets in 2008 and to have a market share of more than 20 percent by 2011, President Chen Xiao said in Hong Kong yesterday. Gome is also seeking to spur growth by acquiring rivals.

"The company is starting to benefit from having a bigger sales network," said Kenny Tang, research director at Hong Kong-based Tung Tai Securities Ltd. "If earnings continue to grow over the next couple of years, all these acquisitions will be justified."

Gome competes with Suning Appliance and Best Buy as consumer spending in China rises.

Gross profit at the electronics retailer rose 71 percent to 4.1 billion yuan in 2007. Gross profit margin climbed to 9.64 percent from 9.54 percent a year earlier, the company said.

Adjusted gross margin, calculated by dividing gross margin and other income by sales, widened 1.04 percentage points to 15.64 percent, the retailer said. The acquisition of China Paradise Electronics Retail Ltd last year allowed Gome to increase operating efficiency, it said.

In 2007, Gome booked a non-operating loss of 505 million yuan from the value adjustment on its convertible-bond derivatives, according to the statement.

Gome last month agreed to pay 541 million yuan for a 10.7 percent stake in Sanlian Commerce Co, which has more than 100 stores in the eastern Chinese province of Shandong, at an auction.

In December, the company said it will finance a partner's 3.6 billion yuan acquisition of Beijing Dazhong Electronics Ltd. Gome may buy the electronics retailer later for a minimum of 3.65 billion yuan.