Executives at China’s second largest construction company reduce salary to 1,300 euros per month – Construction

Several executives at China Vanke, China’s second largest construction company, renounced their bonuses for 2023 and will now receive a salary of 10,000 yuan (1,284 euros) per month, given the country’s real estate crisis.

In the financial report presented this Friday to the Hong Kong Stock Exchange, the group said that up to eight of its executives renounced their bonuses for the 2023 financial year.

Chairman of the board of directors Yu Liang, group executive chairman Zhu Jiusheng and head of the supervisory committee Xie Dong will now receive a salary of 10,000 yuan per month, the document said.

These three executives were the highest paid board members in 2023, representing 39% of the total 9.16 million yuan (1.18 million euros) that the company distributed to the board.

Vanke reported a 46% annual decline in net profit and a 7.56% drop in turnover in 2023, when its sales fell by almost 10%.

The company committed to reducing its debt by around 13.8 billion dollars (12.8 billion euros) over the next two years, and acknowledged that it “evaluated some investments too optimistically”, in a period of “rapid expansion”, while ensuring that it will “more fully predict uncertainties that may arise in the future”.

The construction company also referred to “market concerns” about the company’s financial health, especially since the last quarter of 2023, and stated that, “under critical circumstances”, it received “strong support” from Shenzhen city authorities, in the southeast of the country, which control Vanke’s largest shareholder.

Two weeks ago, the rating agency Moody’s downgraded Vanke’s debt to “junk” status, following news that the company is facing liquidity problems and that its sales fell by another 40% year-on-year. , in the first two months of the year.

The local press recently warned that Vanke’s size and importance could raise alarm bells among investors if it faced financial problems, as it was one of the few state-owned real estate developers that still had a favorable credit rating after the collapse of sector giants such as Evergrande and Country Garden, due to liquidity problems.

The financial situation of many Chinese real estate companies worsened after Beijing announced, in August 2020, restrictions on access to bank financing for developers who had accumulated a high level of debt, including Evergrande, which has liabilities of almost 330 billion dollars.

Commercial sales measured by floor area in China fell 24.3% in 2022 and a further 8.5% in 2023, while new home prices fell at the fastest pace in nearly nine years in December.