Zoomlion Heavy Industry Science and Technology, the Chinese heavy machinery equipment maker that’s seeking to acquire U.S. crane maker Terex Corp., saw profit plunge 85 percent last year, plagued by overcapacity issues as demand slowed in its home market.
Net income sank to 89 million yuan ($13.7 million) in 2015 from 594 million yuan the year before, the Hunan province-based company said in a Hong Kong exchange statement Wednesday. This compares to the average estimate for a 308.3 million yuan net loss of 14 analysts compiled by Bloomberg. Revenue slumped 20 percent to 20.75 billion yuan.
Equipment utilization rates in China, the world’s largest equipment market, have remained stubbornly below 50 percent as construction starts fell last year amid a slowing Chinese economy. Sales of construction machines and other tools in China plunged 44 percent last year and demand may not recover this year as China seeks to rebalance its economy towards consumer spending and away from investment-led growth, according to Bloomberg Intelligence analyst Steve Man.
Zoomlion is looking to hijack Terex’s merger with Finland’s Konecranes Oyj, having raised its cash offer to $31 a share, a dollar higher than an unsolicited bid it made in January, Terex said March 23, adding it will hold talks with its Chinese suitor. The Westport, Connecticut-based company will determine whether it can obtain a binding proposal from Zoomlion, Terex said. Zoomlion said last Thursday it’s made a revised and updated non-binding offer to Terex’s board of directors.
— With assistance by Clement Tan