Zoomlion says 2014 profit may have fallen as much as 80%

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Updated 2015-02-13

China’s Zoomlion Heavy Industry Science and Technology Co Ltd recently issued its fifth profit warning in 21 months, warning its 2014 net income may have dropped as much as 80 percent.

In a brief stock exchange filing, Zoomlion said its net income last year was expected to reach between 767.8 million yuan ($123.5 million) and 1.2 billion yuan, down from 3.8 billion yuan in 2013.

The Changsha-based company attributed the decline to a sustained downturn in China’s property market alongside a slowdown in government fixed-asset investment.

“The demand in the construction machinery market was weak,” Zoomlion said, without providing guidance for 2015.

Zoomlion is among the worst affected companies in China’s heavy equipment industry, which has seen a sustained decline in demand following a supply glut created by China’s 4 trillion yuan ($653 billion) stimulus programme announced in 2008.

Other construction machinery makers, including Sany Heavy Industry Co Ltd, Guangxi Liugong Machinery Co Ltd and XCMG Construction Machinery Co are also feeling the pinch from China’s cooling property market amid the slowing economy.

In August, Zoomlion bought control of mid-sized Chinese farm machinery maker Chery Heavy Industry Co Ltd for 2.09 billion yuan, a move industry observers said was intended to further diversify its operations, which now also include street sweeping trucks.

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