Sinovel, Goldwind Profits Slump as China Wind-Power Growth Slows

Sinovel Wind Group Co. (601558) and Xinjiang Goldwind Science & Technology Co. (002202), China’s biggest wind turbine makers, posted declines in first-quarter earnings as the nation’s wind-power development slowed.

Sinovel said net income fell 87 percent from a year earlier to 56.8 million yuan ($9 million), according to a Shanghai stock exchange filing yesterday. Goldwind profit fell 97 percent to 6.18 million yuan, according to a Hong Kong stock exchange statement yesterday. The company said April 13 that profit may have been wiped out in the first quarter.

Overcapacity and price competition at home and abroad has trimmed the margins of China’s turbine producers. Global prices fell to 910,000 euros ($1.2 million) a megawatt, the lowest since at least 2008, in the second half 2011 from the previous six months, according to Bloomberg New Energy Finance.

Goldwind dropped 2.4 percent to HK$3.65 at the close of Hong Kong trading yesterday, before the earnings. The stock has declined 69 percent over 12 months. Sinovel declined 1.9 percent to 15.86 yuan in Shanghai yesterday.

China is slowing the growth of its wind-power industry through a stricter project-approval process as grids struggle to carry electricity. The National Energy Administration issued plans to approve 16.76 gigawatts of wind farms this year, compared with 26.83 gigawatts in 2011.

The possibility that fewer projects may be approved in 2011 is “the worst news” for turbine makers,Michael Parker, an analyst for Sanford C. Bernstein & Co. in Hong Kong, said April 6. “Their growth’s going to decelerate and may be negative,” he said.

Sinovel’s Chief Financial Officer Tao Gang said last month that manufacturers will only return to profits after a consolidation. The company is among Chinese producers seeking to boost sales from abroad and to develop larger turbines to cope with slower growth at home.

To contact Bloomberg News staff for this story: Feifei Shen in Beijing at fshen11@bloomberg.net

--Editors: Baldave Singh, Nathaniel Espino

--Feifei Shen, Zhang Dingmin. Editors: Baldave Singh, Joshua Fellman

To contact Bloomberg News staff for this story: Feifei Shen in Beijing at fshen11@bloomberg.net

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