The Shenzhen Stock Exchange has placed plumbing product supplier Globe Union Industrial Co’s (成霖) Shenzhen subsidiary under warning, marking it as an investment risk, after it reported losses for a second year.
Shenzhen Globe Union Industrial Corp (成霖潔具), which manufactures faucets for Globe Union, suffered losses of 110 million yuan (US$17.78 million) in 2011 and 98.78 million yuan last year, according to the Taiwanese company.
However, the company said its subsidiary’s losses last year were mostly due to charges for closing down a factory in Qingdao, Shandong Province, to put the Shenzhen unit in a better shape.
“We closed the factory because we do not have a complete supply chain for faucet manufacturing in Qingdao, making the factory unprofitable,” company spokesman Ding Wen-jye (丁文傑) said by telephone.
Ding said the restructuring of Shenzhen Globe Union would start showing progress in the second half of this year.
The Taiwanese company reported revenue of NT$4.57 billion in the first quarter, up 3.48 percent from NT$4.42 billion a year ago and 4.1 percent from NT$4.39 billion a quarter ago.
The growth was supported by the US economic recovery, Ding said, adding that he expected US prospects to remain good this year.
The profit margin of products sold in the US is also rising because of higher product prices, he said.
Shares of Globe Union yesterday declined 5.04 percent to NT$13.20 in Taipei trading, and those of Shenzhen Globe Union dropped 4.93 percent to 2.89 yuan.
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