(JW Insights) Sep 22 -- Major machinery manufacturer Guangxi Liugong Group(广西柳工集团) plans to further boost its overseas business to offset the domestic industry downturn, targeting a 50 percent share from the current 43 percent within three to five years, reported China Daily on September 22.
Senior vice-president Luo Guobing said, "Excavators are a major product for us and we are expanding our footprint in multiple regions with various product lines. Currently, we have more than 30 overseas subsidiaries selling products to over 170 countries and regions."
According to Liugong's half-year financial report, the company's net profit in the first six months stood at RMB614 million ($84.1 million), a 28 percent year-on-year increase. Its revenue grew 9.22 percent to over RMB15 billion, among which RMB6.49 billion was from overseas business, up 57.64 percent year-on-year.
Expanding overseas business has become the choice for many machinery engineering companies to discover new growth points amid the downturn in the domestic industry, experts said.
According to the China Machinery Industry Federation, in the first half, the construction machinery industry saw a decline in sales of excavators and loaders by 24 percent and 13.3 percent year-on-year, respectively, due to sluggish construction of real estate and cyclical factors.
Last year, the China Construction Machinery Association's statistics on China's 26 major excavator manufacturers showed that a total of 261,346 excavators were sold, a nearly 24 percent year-on-year decrease. Among them, domestic market sales were 151,889 units, a 44.6 percent year-on-year decrease, marking the lowest point since 2018.
According to Zheshang Securities, recent policy incentives in the real estate sector will benefit downstream demand for construction machinery, with domestic demand gradually picking up.
Wen Wu, a senior vice-president of Liugong, said, "Even with a slight increase in demand, the current amount of stock of large machinery will create a lag of time in fulfilling actual demand. We remain optimistic about the future but should not expect rapid improvements in the short term," according to the China Daily report.
(Gao J/Yuan XY)
