Dalian Wanda Revenues Drop 14% Despite Global Expansion Spree

Dalian Wanda Group chairman Wang Jianlin has used his status as China’s richest man to offer speeches and books on the way he built a local real estate company in northern China into one of the world’s largest property developers.

A release of preliminary 2016 financial results for Wanda suggests that there may still be few chapters to write on this rapidly expanding conglomerate, however, after overall sales for Wang’s empire dropped by 13.9 percent. Revenues from the company’s flagship commercial properties division led the way down, sinking by 25 percent to RMB 143 billion ($20.73 billion), according to a statement by the company.

Wanda did not provide a figure for its overall revenues, although 2015 revenue was RMB 290.2 billion.

The declining revenues came despite the company continuing to expand its holdings globally, with total assets growing by 21.4 percent to RMB 796 billion during the year. Wanda said that its total profit increased by “double digits” and that operating income was up 3.4 percent to RMB 255 billion. The slide in sales was the first decline in Wanda’s top line in at least 11 years, according to an account in Reuters.

Wanda Diversification Fails to Overcome Property Slide

Wanda’s declining revenues on the mainland came during a banner year for China’s real estate industry when the country’s top three developers recorded an average 82 percent increase in sales.

Wang’s development division, which is China’s largest commercial developer has continued to expand in its home market. The Wanda Commercial Properties opened 50 new Wanda Plaza shopping centres across China in 2016, more than twice the pace of expansion it achieved the previous year. In December, Wang announced an agreement with developer R&F Properties to develop 25 new commercial projects over the next five years involving investment of RMB 30 billion.

Wanda’s cultural division, which includes its world-leading chain of theatre assets and the recently acquired Hollywood production firm Legendary Entertainment, expanded its revenues by 25 percent in 2016, as Wang pursued his vision of creating a diversified conglomerate. However, despite Wang’s acquisition of the Carmike Cinema chain in the US last year and Wanda opening 677 new theatres globally, the culture group failed to reach the target of 30 percent revenue growth which Wang had set in August.

Financial Results Follow a Year of Setbacks

While Wanda cultivated Wang’s image as a business wizard in 2016, the company suffered a series of setbacks across its various divisions.

In December Wanda Group sold off the historic Edificio Espana at a loss equivalent to $75 million, after the Madrid government rejected its plans to tear down and rebuild the historically protected building that Wang had acquired in 2014 for €260 million (then US$358.6 million).

During 2016 two of China’s biggest Internet firms, Tencent and Baidu quietly backed out of a $3 billion partnership to develop an ecommerce platform with Wanda, after Wang’s ffan.com initiative appeared slow to make progress.

Wanda has also stumbled in the UK, where just last week Wang hired the third general contractor for the company’s $1 billion One Nine Elms project, after two previous builders walked away from the opportunity to build the residential and hotel complex.

In December, problems surfaced with Wang’s $4.4 billion plan to privatise and then re-list its Dalian Wanda Commercial Properties on a mainland exchange, when the project’s primary director resigned.

Lu Xiaoma quit the company after would-be back-door-listing partner, Beijing Soft Rock Investment Group, backed away from the deal. Dalian Wanda Commercial Properties de-listed from the Hong Kong exchange in September, and although Wang guaranteed investors a mainland listing within two years, Wanda has yet to announce a new partner for the reverse merger scheme.