Madison Holdings Group, the Hong Kong -listed parent company of Madison Wine and Madison Auction, warned worsening economic situation and intensifying political tensions that will further harm its core business of wine, as it reports a 65.6% decrease in company revenue in the second quarter of the year.
The decline is caused by a confluence of coronavirus pandemic, economic recession and trade frictions between China and the US, according to its latest financial report.
The company reported a drop of approximately HK$47.2 million in revenue in the three months ended on June 30, or a 65.6% decrease as compared with the three months ended 30 June 2019.
Its wine business reported a total sales revenue of HK$ 10.5 million, compared with HK$22.3 million in the same period last year. Meanwhile, revenues from wine auction slumped to HK$ 1.4 million compared with HK$ 2.5 million in Q2 2019.
Aside from wine-related business, the company also provides loan services and blockchain services. Its loan business brought in HK$ 12.9 million but more shockingly, financial services and blockchain failed to create any business during the quarter, according to the company.
Back in 2018, the company was gearing up to buy US$30 million worth of a Japanese cryptocurrency trading platform, BitOcean.
“The business outlook remains highly uncertain due to the on-going China-US trade frictions and the global outbreak of Covid-19, which have deeply impacted the economic, financial and retail sector in Hong Kong and China. The Group expects the near future to remain challenging,” the company said in its latest financial report.
Many wine merchants in Hong Kong which had traditionally leaned heavily towards on-trade and traditional retail channels were hit hard by the coronavirus pandemic.
Earlier as we reported another listed wine company Major Cellar also warned of HK$35 million loss.
With a new wave of outbreak, the city has tightened social distancing rules including a dine-in ban at restaurants and bars after 6pm, and limited public gathering of no more than two persons.
The strict measures will likely cause the city’s dining sector to lose as much as HK$7 billion in July, according to estimates by the city’s industry leaders.