Overseas sales help offset profits slump

CHINA: Major Chinese turbine and component manufacturers have boosted their half-yearly financial report data through strong international sales, while both struggled in a domestic market dogged by surplus production capacity.

by Wu Qi 1 October 2011

Manufacturers still performed badly, as profits fell by 50% overall due to intensifying domestic competition, leading top firms such as Sinovel to tap the overseas market.

Sinovel generated CNY 281 million ($44.4 million) from overseas sales, a significant year-on-year rise. This accounted for 9% of its total sales, compared with less than 1% in 2011. Despite this, overall operating income was down 42% to CNY 3.1 billion and net profits stood at CNY 25 million, down 96%.

Tower successes

Compared with turbine manufacturers, component makers performed relatively well. Titan Wind Energy, a leading Chinese turbine tower maker, had CNY 645 million gross revenues, up 65% over the same period last year. Operating profits amounted to CNY 109 million, up 90% year on year, and total profits reached CNY 110 million, up 86%.

Industry officials attribute the better performances of component makers to weaker domestic competition, with relatively fewer component makers in China.

Titan's overseas sales were up by 182% year on year. In June, it purchased the productive assets of the Varde turbine tower plant in Denmark from Vestas. In contrast, Titan's domestic sales dropped 85%.

Shanghai-based Taisheng Wind Power, another leading tower maker, also performed well. During the first half of this year, Taisheng had CNY 309.7 million gross revenues, up 9.2% over the same period last year. Operating profit amounted to CNY 33.7 million, up 54% year on year. Net profit rose 56% to CNY 37.7 million.

Canadian outpost

Taisheng has also steadily expanded into the overseas market, earning CNY 50 million from exports up to June this year, up 825% on the first six months of 2011. Exports were mainly destined for the US and Romania and accounted for 16% of gross income.

Taisheng has set up a plant in Canada, through its subsidiary TSP Canada Towers, in a joint venture with US-based firm Top Renergy. Production is expected to start at the end of the year and its capacity could cover 65% of the North American market.

Taisheng and Titan were sanctioned by the US for dumping earlier this year, with duties of 14-26% being levied on imported towers. Taisheng's Canadian plant will allow it to supply the US and Canada markets while avoiding the sanctions.

$44 million - The amount generated by Sinovel from overseas sales