HONG KONG: China Railway Group Ltd, the country's largest railway and highway builder, plans to raise 12 billion yuan by way of a bond issue to fund operations and repay loans.

The mega-project builder unveiled its fund-raising plans even as it reported a steep drop in its 2008 earnings in the wake of a 4.1 billion yuan foreign-exchange loss.

It said last year's net profit tumbled to 1.35 billion yuan or 0.063 yuan per share from 2.49 billion yuan or 0.186 yuan per share a year earlier in spite of a nearly 27 percent growth in revenue.

The healthy growth in sales was aided by the government's economic stimulus package in support of an economy that grew at its slowest pace in almost a decade in the first quarter.

China Railway's earnings last year came below analysts' forecast of 1.63 billion yuan. The fund-raising plan is subject to regulator and shareholders' approval, the company said in a statement to Hong Kong stock exchange. It said it plans to issue bonds with maturities up to ten years.

Hong Kong-traded shares in China Railway advanced 1.73 percent to HK$5.27 yesterday.

The company said last year's earnings would have more than doubled to 5.49 billion yuan had it not been for the losses that it incurred from its investment in the Australian dollar.

In a similar incident, conglomerate CITIC Pacific recorded some HK$15.5 billion in currency losses from unauthorized trades related to the Australian dollar.

China Railway's revenue last year totaled 225 billion yuan, compared to 177.4 billion yuan a year earlier.

The company received new construction projects worth some 428.5 billion yuan during the year, of which railway works accounted for 230.3 billion yuan. China Railway said it expects to sign 390 billion yuan in new construction contracts this year.

An influx of new orders has helped the group post a robust 86 percent growth in earnings in the first quarter this year.

China Railway officials said the group is optimistic the economic stimulus measures that the central government continue to pursue will bolster growth this year of the company's business.

The Ministry of Railway's Economic and Planning Institute said some 15 billion yuan was spent last year on railway developments to help cushion the impact of global recession on the national economy.

The institute said spending this year on railway and related construction projects will amount to some 600 billion yuan, of which more than 100 billion yuan has been allocated for the second quarter. More than 200 billion yuan has been earmarked in the third quarter.

(HK Edition 04/30/2009 page4)