Chinese appliance giant GOME sees profit plunge

China's trouble-plagued electrical appliances giant GOME said its first-half net profit plunged 49.6 per cent as consumers tightened their purse strings amid the downturn.

The Hong Kong-listed company reported that its net profit for the six months ending June had dropped to 580 million yuan ($84.9 million), after its revenue fell 17.73 per cent to 20.46 million yuan over the same period.

"Consumer confidence did not rebound until May when government stimulus programmes started to yield results," GOME said in a press statement.

The firm also blamed its former chairman and one of China's richest men, Huang Guangyu, who was arrested by Chinese authorities last year on suspicion of share manipulation in two mainland-listed companies.

"Uncertainties in the business stemming from the police investigation of the company's former chairman also caused some operational distraction," the statement said.

The company, which has 779 stores in China, said it had closed 110 low-efficiency stores, and opened 30 new stores in tier one and two cities, in the first half of the year.

Earlier this month, Hong Kong's High Court issued an injunction to freeze assets of up to 1.66 billion Hong Kong dollars ($213 million) held by Huang, also known as Wong Kwong-yu, his wife Du Juan and two companies.

The freeze stemmed from an application by the city's Securities and Futures Commission, which alleged that the couple organised a share repurchase by GOME last year, to allow Huang to use the proceeds to repay a personal loan to a financial institution.

The financial regulator said the transaction was a "fraud or deception" and caused a loss of about 1.6 billion Hong Kong dollars to GOME and its shareholders.

The company's new chairman Chen Xiao told a press conference that the company was not involved in the case.

"From what we heard from the SFC, it is obvious and clear that this case only concerns Mr Huang and Ms Du. It has nothing to do with the company," he said.

Mr Chen added that the firm would not be a party to the court hearing to be held on September 8 in relation to the freeze.

Trading of shares in GOME was suspended in November after Mr Huang's arrest. It resumed in June after Mr Chen announced that private equity firm Bain Capital would invest $233 million in its new seven-year convertible bonds.