SUMMARY
- China Evergrande Group, once a powerful property developer, reports a combined loss of $81 billion.
- Staggering losses in 2021 and 2022 attributed to property writedowns, land returns, and high financing costs.
- Evergrande's towering debt pile stirs significant concern about the health of China's property sector.
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Once a titan in the property development sector, China Evergrande Group has recently unveiled an astonishing combined loss of $81 billion in a long-awaited earnings report. The unveiling took place late on Monday, giving a grim picture of the company's financial health.
Having the notorious title of the world's most indebted property developer, Evergrande has been caught in the tumultuous waves of default since 2021. In an attempt to combat its grim situation, the company put forth an offshore debt restructuring program in March. This move came as Evergrande found itself in a tight spot, scrambling to complete projects while also being obligated to repay its lenders and suppliers.
The company's net losses for the years 2021 and 2022 were staggering. In 2021, the company posted losses amounting to 476 billion yuan ($66.36 billion), and in 2022, the losses came in at 105.9 billion yuan ($14.76 billion). The reason behind these jaw-dropping losses includes a combination of property writedowns, land returns, financial asset losses, and exorbitant financing costs.
In contrast, the company's financial situation seemed much healthier back in 2020. That year, during its last normal operational period, Evergrande reported a net profit of 8.1 billion yuan.
Recently, Evergrande's mammoth-sized debt has been the subject of immense concern regarding the health of China's property sector - a critical pillar of the Chinese economy. Across the country, defaults and abandoned property projects are becoming increasingly commonplace, casting a long shadow over the country's economic prospects.
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