Wed, Feb 14, 2007 - Page 12 News List

Tsann Kuen says it expects to post a profit this year

OUTLOOK Losses from its Chinese subsidiary hurt the chain last year, but it hopes promotions and a change of strategy will improve its prospects

By Jason Tan  /  STAFF REPORTER

Shares of Tsann Kuen Group (燦坤實業), the nation's largest home appliance and consumer electronics chain, rose by the daily limit yesterday after the company projected it would make a profit this year.

Tsann Kuen shares closed up 7 percent to NT$32.7 (US$0.98) on the Taiwan Stock Exchange.

Tsann Kuen posted its financial forecast on Monday, predicting that its net income would hit NT$1.64 billion, or NT$5.16 per share, for the whole year.

Sales are expected to be NT$30.94 billion, it said. Tsann Kuen posted NT$29.6 billion in revenues last year, down from NT$30 billion in 2005.

The positive forecast should help to dissipate the gloom that resulted from Tsann Kuen's less than stellar financial results last year.

record losses

Partly as a result of the losses incurred by its Chinese subsidiary, the chain last year posted its biggest losses in five years -- an estimated loss per share of between NT$3.94 and NT$4.71.

The company said last month that net losses of Tsann Kuen (China) Enterprise Co (廈門燦坤實業) last year were estimated at 680 million yuan (US$87.8 million) to 760 million yuan. Tsann Kuen ascribed the losses to rising material costs, yuan appreciation and order losses.

Tsann Kuen has a 62.3 percent share in its Chinese subsidiary, which operates production facilities located in Xiamen and Zhangzhou, both in Fujian Province.

But Tsann Kuen (China) is forecast to post net income of 100 million yuan this year, after changing business strategy to focus on the design, production and sale of small appliances rather than retail business, it said.

initiative

To boost local sales, Tsann Kuen worked with Microsoft Taiwan Corp to create a "digital lifestyle" showroom in Tsann Kuen's flagship Neihu store.

The showroom demonstrates the integration of devices such as Xbox 360 game consoles and the Windows Vista operating system into the modern home.

Last month, Tsann Kuen arranged a promotion with LG Electronics Inc to sell 32-inch liquid-crystal-display television sets at a competitive price of NT$22,800. A 24-month interest-free installment scheme was also offered.

As a result, 2,500 TVs were sold between Jan. 26 and Jan. 29, boosting revenues.

Meanwhile, smaller rivals E-Life Mall Co (全國電子) and Sunfar Computer Co (順發電腦) have also laid out expansion plans to position themselves for rising consumer spending.

E-Life Mall said it aimed to increase its number of stores by 100 to 355 in two years. Sunfar, which has 45 outlets, hopes to add another seven stores this year.

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