Haier Electronics Group Co. Ltd. issued a profit warning Friday, saying its first-half results would be hit by an operating loss and impairment loss related to its mobile handset business.

"It is expected the consolidated interim results of the group for the six months ended 30 June 2005 may be materially and adversely affected by the performance of its mobile handset business," the Shandong-based washing machine and mobile handset maker said.

The company said its mobile handset business would report an operating loss for the first half of 2005 due to intensifying competition and price reductions.

There was a decrease in sales and an increase in provisions for doubtful debts and inventories for the group's mobile handset business against the same period in 2004, it added.

Chairman Yang Mianmian said in the statement that the firm may write down the value of goodwill attributable to its acquired interest in the mobile handset business which would result in an impairment loss to be recorded in the interim results.

Haier, which will announce its results by the end of September, said it was in the process of preparing its unaudited interim results and is not in a position to quantify the impact of its mobile handset business. It gave no financial details.

Shares of Haier have fallen 9.2 percent over the past three months.

(Shenzhen Daily September 5, 2005)