Bloomberg News

China Trainmaker CSR Discusses Europe, Americas Purchases

April 16, 2012

CSR Corp. (1766), China’s biggest trainmaker, said it’s in talks on possible acquisitions in Europe, North America and Australia as it seeks to add new technology and pare a reliance on domestic sales.

“We are actively pursuing deals that can bring us complementary technologies,” Chairman Zhao Xiaogang said in an April 13 interview in Hong Kong, without naming specific targets. “Companies in developed countries are facing some difficulties and they may have a desire to sell.”

CSR, based in Beijing, is seeking deals as Zhao strives to boost overseas sales to 20 percent of revenue by 2015 from 7.7 percent last year. China has also pledged to improve safety standards on domestic railways after a fatal high-speed crash last year.

The state-controlled trainmaker is in talks on possible acquisitions in Spain, Italy, Germany, the U.K. and France, Zhao said. The company and its units also make carriages, wagons and wind turbines.

Zhao declined to comment on whether the group had bid for stakes in Finmeccanica SpA’s train-making unit AnsaldoBreda and signaling-maker Ansaldo STS SpA. (STS) Italian newspaper Il Sole 24 Ore said on April 7 that the company had made an offer. Hitachi Ltd. (6501) is a more probable buyer, the report said. Hitachi spokesman Atsushi Konno declined to comment on April 13. Finmeccanica has said it wants to sell AnsaldoBreda this year.

Dynex Purchase

CSR’s Hong Kong-listed unit Zhuzhou CSR Times Electric Co. bought Lincoln, England-based component-maker Dynex Power Inc. in 2008. The trainmaker also agreed to form a high-speed rail venture in the U.S. with General Electric Co. in 2010.

CSR rose 2.2 percent to HK$5.62 at close in Hong Kong. The company has fallen 19 percent since the July 23 high-speed train near Wenzhou that killed 40 people. Zhuzhou CSR climbed 0.7 percent to HK$20.40.

The trainmaker expects export sales to grow more than 50 percent this year after more than doubling the tally last year, Zhao said. The company’s 2011 orders included a high-speed train deal from Georgia, a freight-wagon contract from the U.A.E and locomotive sales in Australia, Turkmenistan and Saudi Arabia.

Total revenue growth may cool to 10 percent this year from 24 percent last year, according to the company’s annual results statement, as China slows construction of new high-speed lines.

China’s spending on railway construction slumped 35 percent last year. The nation will complete a “batch” of important rail projects, the State Council said last month, without elaboration.

To contact the reporters on this story: Jasmine Wang in Hong Kong at Jwang513@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net


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