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China

China

Sinovel warns of massive losses

CHINA: Sinovel has warned that it expects its 2013 losses to have increased fivefold compared with 2012.

Sinovel said it made fewer installations last year
Sinovel said it made fewer installations last year

The Chinese turbine manufacturer said its net loss may be as much as CNY 3 billion ($491 million) following a turbulent year.

In 2012, the company posted a loss of CNY 583 million, meaning that the Shanghai Stock Exchange may place the company under consideration for delisting due to losses over consecutive two years.

The main reasons for the losses, the company said, were the delayed execution of orders, late payment by customers, provisions for bad debts and, perhaps most significantly, a drop in installations over the year.

Sinovel also said that its exposure to potential regulatory penalties due to its alleged accounting irregularities would dent its results.

Earlier this month, China's stock market watchdog, the China Securities Regulatory Commission (CSRC), said it is to look into a suspected breach of security market regulation by Sinovel.

This is the CSRC's second investigation into the turbine manufacturer in eight months.

As the Chinese wind sector began to slow in 2011 following a five-year boom period, Sinovel continued to expand staff and build more factories, betting the company's future on offshore wind power and the overseas market.

The gamble failed to pay off and Sinovel closed its offices in Canada, Belgium, Italy and the US in July.

In an an attempt to reverse its fortunes, the firm has introduced a number of measures, including downsizing, slashing financial costs, adjusting organisational structure and changing the company's strategic priorities.

The company is still going ahead with its development of a 10MW turbine, for which it recently said the designed has been completed.

At the company's height in 2011 its shares were worth CNY 39 (£6.30), but have now crashed to just CNY 3.4.

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