China

China

Sinovel problems continue with new profit warning

CHINA: Sinovel has announced it expects a profit loss around CNY 260 million ($41.3 million), for the first nine months of 2012.

The estimation was made in a public notice, released on the night of October 9, to rectify its previous forecast of performances in the first nine months.

On August 28, Sinovel said its net profits in the first nine months might drop over 50% year on year. It earned 900 million yuan net profits in the first nine months of 2011.

Sinovel said the net profit loss was attributed to China’s macro-economic fluctuations and industrial policy adjustment.

In April, the National Energy Bureau announced the second batch of wind farm projects for the 12th Five-year Plan period (2011-15), which totalled 14.92GW. This was nearly half the size of the first batch of 28.83GW projects, released in August last year. The Chinese government is trying to control the pace of wind farm construction to prevent it outpacing growth of the grid.

As a result Sinovel said it was unable to deliver as many turbines to wind farm buyers as scheduled, despite orders at hand.

In addition, turbine buyers delayed paying Sinovel for the delivered turbines. And Sinovel had to earmark more funds to deal with financial costs and bad debts.

Difficult first six months

In August, Sinovel revealed its net profits were down 96.3% from the same period of last year, to the value of CNY 24.7 million, in the first half of this year.

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