Once mighty Sinovel sees net profits dive by 73%
Previously China’s largest player in the wind power industry, the Sinovel Wind Group has reported a 72.8 percent plunge in net profits for 2011 which it blames on growing competition tougher standards for grid connections and project approvals.
Sinovel also reported a drop in revenues by 48.6 percent over 2010 to RMB10.44 billion (USD1.6 billion).
“Although turbine prices picked up and remained stable in the second half, they were still more than 40 percent lower than prices in 2008,” said Sinovel in its report to investors on the Shanghai stock exchange.
New government policies aimed at improving the safety of wind power in China and tighter lending conditions delayed project construction contributing further to slower sales, the company stated.
Sinovel, which raised RMB9.46 billion (USD1.5 billion) when it went public in Januray, 2011 at a price of RMB90 (USD14.3) per share, installed 2.9-GW of turbines in China last year – down by a third on 2010’s figure – which led it to give up its leading market-share position to rival Goldwind.
The sharp drop in profits and worsening payment terms has put a large dent in Sinovel’s cash flow. The company’s accounts receivables increased by 32 percent to 2.89 billion yuan as customers delayed payments.
Sinovel is hoping to boost income with larger turbine models and sales to international markets.
Its newer 3-MW turbine accounted for roughly a tenth of its total sales income last year. The company installed two 5-MW prototypes for testing in 2011 and has developed a 6-MW machine.