China Resources Land sees record drop in interim profit due to property market slowdown

China Resources Land (CR Land) reported its biggest earnings drop ever as weakness in China’s housing market led to profit losses for major property developers.

Net profit fell 25 percent in the first six months to a six-year low of 10.25 billion yuan ($1.44 billion), below the consensus forecast of analysts compiled by Bloomberg. The decline was the biggest percentage drop since the Shenzhen-based construction company went public in 1996.

Revenue rose 8.3 percent to 59.13 billion yuan, the developer said in a filing on the Hong Kong Stock Exchange on Tuesday. Preliminary gross profit fell to 17.63 billion yuan, while gross profit margin fell 3.4 percentage points to 22.3 percent, the filing said.

China’s fifth-largest property developer sold fewer homes in the first half of the year, finding buyers for properties worth 124.7 billion yuan, down 26.7 percent from the same period last year.

“The property market showed signs of moderate recovery, but overall it was still in an adjustment cycle with reduced demand,” said Li Xin, chairman of CR Land, in the statement. “Given the current market environment, the group actively responded to risks and challenges by balancing development and safety and continuously promoting various initiatives to improve quality and improve management efficiency, resulting in stable overall performance in the first half of the year.”

The developer announced an interim dividend of 0.2 yuan per share.

CR Land was far from the only company to struggle with China’s property crisis. Longfor Group, founded in Chongqing three decades ago, last week reported a 28 percent drop in its first-half core profit as its earnings were hit by falling sales and shrinking margins.

China’s real estate sector has been plagued by problems since 2020, when Beijing introduced the “three red lines” policy to restrict developers’ borrowing spree.

Although Beijing announced in May the establishment of a historic 300 billion yuan fund to buy up residential properties and revitalize the sector, slow progress in implementing the program has not led to an increase in home sales.

Revenue of China’s top 100 property developers fell 39.5 percent to 1.85 trillion yuan in the first six months of this year, according to data from the China Real Estate Information Corporation (CRIC). In July, revenue fell 36.4 percent from June to 279 billion yuan, CRIC data showed.