Sinovel forecasts 163% profit fall for 2012

CHINA: Turbine manufacturer Sinovel is predicting a preliminary loss of CNY 490 million ($77.8 million) for 2012, down 163% on the previous year.

Sinovel's 3MW turbine has been part of the company's focus on bigger machines
Sinovel's 3MW turbine has been part of the company's focus on bigger machines

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The loss was mainly attributed to China’s market conditions and industrial policies, which affected implementation of orders in hand.

Sinovel added the loss was also caused by wind farm developers’ delay in payment. It left an adverse impact on Sinovel’s financial costs and provisions for bad debts. Sinovel made CNY 775 million net profit in 2011.

The company defended the figures, claiming the Chinese wind power industry was experiencing continual adjustment, with market competition forcing down turbine prices.

Sinovel complained about the policy of intensifying grid access management and stricter wind farm construction approval, which squeezed wind farm construction size and slowed construction rate.

As a result, Sinovel suffered smaller sales revenues and bigger sales expenses.

In the first three quarters, Sinovel managed to win CNY 3.6 billion operating revenues, down 56% from the same periodin the previous year. But in the third quarter, it lost CNY 280 million, down 215% from the net profits of the same period of 2011.

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