Zoomlion Heavy Industry Science and Technology Co., China’s second-biggest construction equipment maker, posted profit that missed analyst estimates as government measures to cool the property market damped demand while finance costs and provision for bad debts increased.
Net income in 2012 fell 9.1 percent to 7.33 billion yuan ($1.18 billion) from 8.07 billion yuan in the prior year, according to a filing to the Hong Kong stock exchange today. That compares with the 8.49 billion yuan average of 26 analysts’ estimates compiled by Bloomberg. Sales climbed 3.8 percent to 48 billion yuan.
Zoomlion, based in Changsha, Hunan province, and bigger rival Sany Heavy Industry Co. face a drop in orders as slowing economic growth and government curbs on the property market sap demand. Zoomlion is also seeking to boost investor confidence after its shares slumped following a January report in Hong Kong’s Ming Pao newspaper that the company’s sales may have been exaggerated.
“Economic growth in China remained slackened with low investment in infrastructure,” the company said in today’s statement, “The construction machinery industry was also under severe challenges brought by the sluggish growth of production and sales and the increase in credit risks.”
Shares (1157) of Zoomlion rose 0.9 percent to HK$9.37 at the close in Hong Kong trading, before the earnings were released. The stock has slumped 21 percent since Ming Pao reported on Jan. 8 that it had received an unsigned letter alleging that Zoomlion’s sales are exaggerated.
Zoomlion has repeatedly denied the allegations. It is “a company with integrity,” Zhan Chunxin, the chairman, told reporters in Guangzhou Jan. 11.
The company last month suspended the sale of its sanitation business after failing to get any offers for almost a year. The unit makes street sweepers and garbage trucks.
Net finance costs last year jumped to 274 million yuan from 36 million yuan in 2011, the statement showed. General and administrative expenses increased 27 percent to 2.37 billion yuan because of a “significant” increase in provisions for bad debts and impairment of inventories, it said.
Zoomlion proposed to pay a final dividend of 0.2 yuan per share, compared with the payout of 0.25 yuan a year earlier.
To contact the reporter on this story: Jasmine Wang in Hong Kong at Jwang513@bloomberg.net
To contact the editor responsible for this story: Anand Krishnamoorthy at firstname.lastname@example.org