Tough times for construction machinery firms

Xuzhou Construction Machinery Group (XCMG) has reported a three-year low in net profit during the third quarter.

Revenue during the period reached 6.84 billion yuan ($1.1 billion), up 20 percent year-on-year from the same period last year, but down 31 percent quarter-on-quarter.

Net profit was 378 million yuan, a year-on-year fall of 37 percent, and a three-year low.

Despite the declines, the machinery giant still appears to be following an aggressive expansion strategy, however.

It plans to move into the rare earths industry by investing 490 million yuan through one of its wholly-owned subsidiaries to form a new company with other two enterprises, with XCMG holding 49 percent of stake in the new company.

Including that new company, XCMG has announced nine investments this year, amounting to over 2 billion yuan, more than the total net profit generated in the first three quarters, according to a report in caijing.com.cn.

Meanwhile, Sany Heavy Industry Co Ltd, another machinery giant in China, has also reported dropping performance figures for the first three quarters.

Sany gained a net profit of 5.87 billion yuan for the Jan-Sept period, a 23.43 percent fall year-on-year, and compared to the 13.12 percent fall recorded in the half-year.