China Evergrande Group, the world’s most-indebted property developer, has reported a narrower net loss for the first half of the year, attributing it to a rise in revenue. The company, which has been facing a severe debt crisis, reported a net loss of 33 billion yuan ($4.53 billion) for the January-June period, compared to a loss of 66.4 billion yuan in the same period the previous year.
Evergrande’s financial troubles have been escalating since late 2021, with a series of debt defaults, unfinished housing projects, and unpaid suppliers. This situation has shattered consumer confidence in the world’s second-largest economy.
The company’s recent debt troubles have had ripple effects, including missed US dollar coupon payments by China’s largest private developer, Country Garden, in August. This has raised concerns about contagion in an economy already weakened by tepid domestic and foreign demand, faltering factory activity, and rising unemployment.
Despite these challenges, Evergrande reported a 44% increase in first-half revenue from a year earlier, amounting to 128.2 billion yuan. The company attributed this increase to actively planning for the resumption of sales and capitalizing on a short boom in the property market earlier in the year. However, its cash balance fell by 6.3% to 13.4 billion yuan.
Evergrande’s liabilities slightly decreased to 2.39 trillion yuan from 2.44 trillion yuan at the end of 2022, and total assets also shrank to 1.74 trillion yuan from 1.84 trillion yuan.
The property developer had previously reported a combined net loss of $81 billion for 2021 and 2022 in a long-overdue earnings report. Despite the financial difficulties, Evergrande’s auditor, Prism Hong Kong and Shanghai, have not issued a conclusion on the annual financial statements report due to multiple uncertainties.
In August, Evergrande filed for US bankruptcy protection as part of one of the world’s largest debt restructuring operations. The company is also awaiting decisions from courts in Hong Kong and the Cayman Islands regarding an offshore debt restructuring plan involving $31.7 billion worth of instruments.
The outcome of these developments will have significant implications for Evergrande’s financial future and the broader economic landscape.