The decline in the first five months of construction machinery has narrowed

The global economic downturn continues to drag down the profitability of construction machinery companies. Last year, the world’s top 50 engineering machinery net profit fell 5.46% year-on-year. After the domestic construction machinery industry continued to decline in the first quarter of this year, there were signs of stabilization in April and May, and the decline in the sales scale of the industry narrowed.

The decline in the domestic market narrowed

Su Zimeng, secretary general of the China Construction Machinery Industry Association, revealed on the morning of the 19th that in the first quarter of 2013, the operating revenues of leading domestic construction machinery companies, including Zoomlion and Xugong Machinery, all fell sharply.

Su Zimeng believes that this situation in the construction machinery industry will continue for some time. He said that although the current industry production and sales decline, but the decline has stabilized, in April and May the decline in the scale of industrial sales is narrowing.

In an interview with a China Securities Journal reporter, Guo Xuehong, vice president of Zoomlion, said that although the decline in sales of the construction machinery industry has gradually narrowed in April and May, it is still difficult to judge whether the industry has bottomed out.

Su Zimeng said that domestic construction machinery companies are actively adjusting the structure and transferring methods, striving to improve product quality and brand value, consolidating the foundation for development, and tackling the high-end market. At the same time, domestic companies have made breakthroughs in overseas expansion.

According to Guo Xuehong, apart from continuing to seek overseas acquisition targets, Zoomlion has already built factories in Brazil and is preparing to build plants in Russia and South Africa. Sun Jianzhong, vice president of Xugong Machinery, revealed that since the beginning of this year, the company's overseas exports have maintained a rapid growth.

Top 50 Global Profits Decline

The continuous downturn in the construction machinery industry has dragged down the industry's leading profit. In 2012, the total sales volume of the world’s top 50 construction machinery manufacturers reached US$97.65 billion, but the growth rate has declined significantly from the previous year. The profit of 50 companies was 21.075 billion U.S. dollars, a decrease of 5.46% from the previous year.

Among the top 50 companies, 26 companies achieved growth in sales, of which 19 were from Europe and the United States; 24 companies saw sales decline, of which 18 were from Asian companies. It is not difficult to see that although the recovery of the US and European markets is not strong, these economies have obviously improved compared to other countries.

Compared with the slightly mediocre increase in sales, the overall profitability of construction machinery manufacturers is even more disappointing. Only 15 of the top 50 companies have achieved an increase in operating profit.

Among the top 50 indexes, the three indicators that continue to rise are the "average average assets", the "average corporate total assets" and the "average internationalization index." The "asset return rate" has been declining for two consecutive years. Under the dilution of the increase in the number of employees in the company, the “per capita sales” indicator also decreased from the previous year.

The changes in the construction machinery industry reflect, to a certain extent, the macroeconomic conditions of various countries. From the perspective of sales volume, the sales volume of construction machinery companies in the United States exceeded US$65.4 billion, an increase of 3.32% year-on-year; while the sales of Japanese and Chinese companies ranked second and third were down 3.26% and 2.27%, respectively.