Midea's profit hurt by tumble in demand

A sharp drop in domestic and foreign demand for home appliances hammered Guangdong Midea Electric Appliances Co, which yesterday said its net profit for 2008 tumbled nearly 15 percent after it posted a loss in the fourth quarter.

Midea's net income in 2008 fell 14.78 percent year on year to 1.03 billion yuan (US$150 million), or 0.55 yuan a share. Sales gained 28.77 percent to 45.31 billion yuan, the company said in a statement to the Shenzhen Stock Exchange.

The firm didn't disclose figures for the fourth quarter but according to an earlier statement to the Shenzhen bourse, its profit for the first three quarters in 2008 rose to 1.24 billion yuan from 1.04 billion yuan in 2007. The results missed analysts' estimate of a 25-percent gain in net profit. The biggest publicly traded appliance maker by market value in China fell 4.39 percent to 10.02 yuan.

"Exports continue to slump with the deepening global financial crisis," said Zhang Xiaoliang, an analyst at Bohai Securities Co. "Markets such as the Middle East and Latin America began to see demand fall. Domestically, a sluggish property market hit demand for home appliances."

Sales of white goods in China suffered last year. Sales of air conditioners last year fell 6.34 percent nationwide annually to 65.18 million units, according to TX Investment Consulting Company. Air conditioners made up 72 percent of Midea's total sales.

The rise in refrigerator sales fell 28 percentage points to 1.12 percent while washing machine sales rose 11.69 percent to 23.8 million units, but the growth rate was 14.26 percentage points lower than that of 2007, according to TX.