14th Sep 2015 07:58
LONDON (Alliance News) - China Chaintek United Co Ltd on Monday posted a sharp fall in profit and revenue for the first half as the company was hit hard by the slowdown in economic growth in China, and it said its profit and revenue for the full year will be harder hit than originally anticipated.
The company, which provides logistics services to consumer goods companies in China, said its pretax profit for the six months to the end of June was CNY64.2 million, down from CNY144.7 million. Revenue was down to CNY129.9 million from CNY173.8 million and the group's pretax profit margin was hammered, falling to 49% from 83%.
The company said its transportation partners, in line with the slowdown in China, made fewer trips on behalf of the company in the half, but the commission rates it has paid to these partners have remained the same as the company has effectively subsidised its partners in order to ease their cash flow problems.
China Chaintek said it expects revenue to fall further than originally anticipated in the full year, with Inventory Solutions revenue now expected to fall 40% year-on-year, compared to previous guidance for a 20% shortfall. Its guidance for a 35% fall in logistics services revenue in the half remains unchanged.
The group also said it anticipates paying a further CNY10 million to CNY15 million in subsidies to its transportation partners in the second half, bringing total payments for the year to around CNY30 million and, in combination with higher marketing costs, meaning pretax profit will fall by around 65%, compared to the company's original guidance of 50%.
"Despite the slowdown in the growth of China's economy and the changes being implemented by our manufacturing customers, the group remains focused on expanding capacity. The board remains confident that the company is building a solid foundation for the growth desired by management and shareholders alike," said Shufang Zhuang, China Chaintek executive director and the founder of the company.
Shares in China Chaintek are currently suspended.
By Sam Unsted; [email protected]; @SamUAtAlliance
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