(Yicai) March 29 -- Struggling property developer China Vanke said it will go all out to reduce its interest-bearing debt by a third over the next two years, including not paying a dividend for the first time in more than three decades.

Vanke plans to cut interest-bearing debt by more than CNY100 billion (USD13.8 billion) in the next two years, the Shenzhen-based firm said in its 2023 annual earnings report yesterday.

As of the end of last year, Vanke had interest-bearing debt of CNY320.1 billion, accounting for over 21 percent of its total assets, the company said. CNY62.4 billion (USD8.6 billion), or 20 percent, is due within 12 months.

“The industry is undergoing an in-depth adjustment, and after comprehensive consideration, the company will not pay dividends, issue bonus shares, or issue any share capital by way of conversion of capital reserve for the year 2023,” Vanke said in the earnings report.

In an uncertain market environment, the company needs to ensure positive business cash flow while pushing ahead with debt reduction, it noted.

Shares of Vanke [SHE: 000002] closed 2.6 percent down at CNY9 (USD1.25) apiece in Shenzhen today, pulling back from an earlier decline of as much 3.9 percent decline. The stock has fallen over 40 percent in the past 12 months.

Vanke had CNY99.8 billion of cash on hand as of Dec. 31, down 27 percent from a year ago but much more than the interest-bearing debt due over the next 12 months. Its asset-liability ratio, excluding presale payments on homes, was 65.5 percent, down 2.1 percentage points.

Vanke’s operation shave come under intense pressure from the deep adjustment in the country’s real estate sector, the firm said. Some of the investment decisions Vanke made during the industry’s rapid development phase were too optimistic, and it will take time to digest these projects, it noted.

The builder secured CNY89.7 billion worth of financing last year, of which CNY76.6 billion was in China and CNY13.1 billion from offshore, the company noted.

Net profit shrank 46 percent to CNY12.2 billion in the 12 months ended Dec. 31 from the year before, the earnings report showed. Revenue fell 7.6 percent to CNY465.7 billion.

Income from property development and related asset operation businesses accounted for CNY429.8 billion, or 92 percent, of the total, while that from property services made up CNY29.4 billion, or 6.3 percent, of the total.

Vanke’s contracted sales area was nearly 24.7 million square meters last year, a 6.2 percent decline on 2022. The value of contracted sales fell 9.8 percent to CNY376.1 billion.

Editors: Tang Shihua, Futura Costaglione