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China Research and Intelligence: Chinese Construction Machinery Industry Began to Boom in Q1 of 2009 while the Export is still Grim

www.shcri.com --Due to the increasing investments in Chinese infrastructure construction and the cost reduction in Chinese construction machinery, Chinese construction machinery industry began to boom in the first quarter of 2009.

 

 

In the first quarter of 2009, the newly added fixed asset investments in China reached to 91.8 billion USD, up by more than 50% year on year, propelling the development of the industries related to the infrastructure construction. Among the various infrastructure constructions, the transportation construction became the biggest bright spot. According to the incomplete statistics, the investment scale in the newly started railways, highways and ports would exceed 40 billion USD in the first quarter of 2009, which was closely related to the earth and stone machinery, lifting machinery, piling machinery and concrete mixer machinery.

 

Only in February 2009, China had finished 2.93 billion USD investments in the railway construction in a single month, up by over 200% year on year. The investments in the highways were finished 4.6 billion USD in February, sharp up by 70% YOY.

 

Under the influences of international financial crisis, the growth speed of Chinese economy begins to slow down. However, there are still huge demands and potential demands for the construction machinery in Chinese domestic market. In the 4-trillion-Yuan investment plan issued by Chinese government, 75% projects have more or less relationships with the construction machinery. It is roughly estimated that the investment plan will drive 20-biilion-USD domestic construction machinery market.

 

On the night of 26th April 2009, SANY Heavy Industry Co., Ltd issued the first quarter financial statement, which said that the company realized the operation revenues of 2.847 billion Yuan in the first quarter of 2009, up by 6.9% year on year; the net profits subject to the parent company were 236 million Yuan, down by 21.8% year on year. The basic earnings per share were 0.1589 Yuan.

 

On 29th April 2009, Xuzhou Construction Machinery Group issued the first quarter financial statement of 2009. In the reporting period, the operation revenues totaled 735 million Yuan, down by 15.87% year on year. The net losses were about 8.6 million Yuan, decreased by 36% compared with 13.42 million Yuan losses in 2008, equivalent to a net loss of 0.016 Yuan per share.

 

On 29th April 2009, Changsha Zoomlion Heavy Industry Science & Technology Development Co., Ltd also announced their financial statement in the first quarter of 2009; the company realized the operation revenues of 3.517 billion Yuan, up by 38.65% year on year and the net profits of 301 million Yuan. With the influences of the operation cost increases and so on, the net profits of the company were cut down by 17.72% year on year and the earnings per share were 0.1977 Yuan, down by 58.87%.

 

On 29th April 2009, Guangxi Liugong Machinery Co., Ltd made their financial statement publicity. In the reporting period, the company realized the total operation revenues of 2.209 billion Yuan, reduced by 10.16% YOY, 151 million Yuan of net profits, up by 8.57% YOY. Marked improvement had been achieved compared with the net losses of 49 million Yuan in the fourth quarter of 2008, realizing 0.32Yuan earnings per share.

 

Most construction machinery products produced in China belong to the medium and low quality, but certain advantageous in the cost performance. Under the circumstances of the depressed global construction machinery market, there are comparatively more choice opportunities for Chinese products.

 

From January to February 2009, the import and export amounts in Chinese construction machinery industry were 1.88 billion USD, 26 percent less than the previous year, in which the import amounts were 660 million Yuan, down by 21.5% over the previous year; the export amounts were 1.21 billion USD, reduced by 29.2% compared with last year, 550 million USD trade surplus.

 

From January to February 2009, China accumulatively imported 380 million USD of the complete construction machinery, down by 19% compared with 2008, accounting for 57% of the total import amounts; 290 million USD were spent on the component imports, decreased by 23% over the previous year, accounting for 43% of the total import amounts. The crawler digger imports cost 120 million USD, reduced by 41% compared with 2008, accounting for 32% of the complete machinery imports.

 

In the field of exports, China totally exported 770 million USD of the construction machinery, down by 32.5% compared with 2008, accounting for 645 of the total export amounts; the export amounts of the components were dropped by 22.8% to about 440 million USD over the previous year, accounting for 36% of the total export amounts.

 

However, Chinese construction machinery manufacturers over relied on the export market, especially the developing countries. The profits are comparatively low. It is quite difficult for Chinese construction machinery products to enter the foreign high-quality market because of the existence of the component supply, product reliability and service problems.

 

Source: China Research and Intelligence

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