Qingdao Haier Co., a China-based appliance maker, reported a 32-percent drop in third- quarter profit as costs increased and competition to sell refrigerators and televisions intensified.
The company reported net income fell to 64.6 million yuan (approx. U.S. $8 million) from 94.7 million yuan (approx. $11.7 million) a year earlier. Sales rose to 3.7 billion yuan (approx. $457.7 million) from 3.6 billion yuan (approx. $445.3 million)
Haier said it is spending more on equipment upgrades and research so that it can make more advanced, higher-margin products such as digital televisions.
The company said costs in the third quarter rose to 3.3 billion yuan (approx. $408.2 million) from 3.2 billion yuan (approx. $395.8 million) in the same period of 2005. For the first 9 months, net income rose to 287.4 million yuan (approx. $35.5 million) from 285.4 million yuan (approx. $35.3 million). Sales rose to 13.3 billion yuan (approx. $1.6 billion) from 12.3 billion yuan (approx. $1.5 billion).
The company said its gross profit margin for air conditioners fell to 11.4 percent from 11.6 percent for the first 9 months. The gross margin for refrigerators shrank to 12.3 percent from 16.3 percent in the same period. (Bloomberg)
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