According to the turbine manufacturer's semi-annual report released yesterday, the decline was mainly attributed to falling sales prices and reduced sales revenues.
China's intensified grid-access management and stricter project approval policy have reduced both the number of wind farms being built and their speed of construction, said the report. This has increased price competition and significantly cut sales revenues for the likes of Sinovel and Goldwind, which posted similarly large profit falls last week.
In the first six months of 2012, Sinovel had 3.086 billion yuan ($485.7 million) operating revenues, down 42.04% on the same period last year.
To cope with the difficult domestic situation, Sinovel says it has adopted measures to consolidate competitiveness in the domestic market and expand overseas sales. This led to 77.5% year-on-year increase in sales costs, to the value of 242 million yuan ($38 million), which significantly impacted the profit margins of the company in the first half of the year.
During the first half year period, Sinovel said it had raised overseas sales to the value of 281 million yuan, occupying 9% of the total sales, compared with less than 1% in the first half of 2011.
Sinovel said that by the end of June it had 14,359MW orders in hand, including those won but not yet signed contracts. The orders in hand amounted to 4,893.5MW, including 3,622.5MW for 1.5MW turbines, 1,266MW for 3MW turbines, 5MW for 5MW turbines. The orders won but not signed yet stood at 9,465.5MW, comprising 4,255.5MW for 1.5MW turbines, 4,155MW for 3MW turbines, 905MW for 5MW turbines, and 150MW for 6MW turbines.
Among all the orders, 631.5MW came from overseas projects.
Sinovel estimated that Chinese wind power industry would continue to suffer from the current problems for a considerable period, and this would hamper profit margins of the company. It expects to have net profits down over 50% in the first nine months of the year.