Goldwind, China’s largest turbine manufacturer by sales, reported a 75 per cent drop in its annual profits, highlighting the widespread downturn in China’s turbine industry.
China is the world’s biggest installer of wind turbines, accounting for more than a third of new installed capacity in the world last year, but Chinese turbine makers have struggled to raise profits amid overcapacity and a decline in new installations.
The size of China’s market has made it a prized target for foreign turbine producers such as Vestas of Denmark and Gamesa of Spain, but domestic producers such as Goldwind, Guodian and Sinovel have succeeded in capturing the lion’s share of the vast market.
However, as Chinese turbine demand slows – new turbine installations fell 18 per cent last year, according to Bloomberg New Energy Finance – Chinese turbine makers are widely expected to report poor profits. Tightening regulations on wind installations as well as grid connectivity challenges contributed to the drop in installations last year.
Goldwind, which has a market share of about 19 per cent in China and is listed in Hong Kong and Shenzhen, said pre-tax profit fell 76 per cent to Rmb207m ($33m) on revenues that were down 11.8 per cent to Rmb11.3bn ($1.8bn). Goldwind said the drop in profits was due to an “industry downturn” and chairman Wu Gang said 2012 had been “a period of adjustment”.
The results were “worse than expected”, said an analyst in Hong Kong, pointing out that Goldwind’s turbine delivery had trebled in the second half of the year without an equivalent increase in profits.
Nevertheless, China’s turbine demand is expected to pick up this year, and Bloomberg New Energy Finance forecasts that turbine installations could rise by more than 4 per cent this year. Patrick Dai, energy analyst at Macquarie, is more optimistic, forecasting that demand could grow by as much as 20 per cent this year from the previous year.
China’s rapid push into wind power has been driven by Beijing’s desire to reduce its dependence on imported fossil fuels. Wind power is China’s third-largest energy source, behind coal and hydropower, according to official statistics.
