The slumping global economy has hit hard at China's largest injection press maker, Haitian International Holdings Ltd., with the company reporting falling sales and profit in 2008, a sharp reversal of several years of double-digit growth.
But company officials, in an April 2 news conference announcing their financial results, suggested the worst may be over in the domestic Chinese market, which is showing signs of a rebound pushed by the Chinese government's 4 trillion yuan (US$580 billion) stimulus package.
Haitian executives said the company has decided to combat the slowdown by launching a rebranded series of even cheaper, simpler machines designed specifically for developing regions in Asia and Africa.
Haitian, based in Ningbo, reported in its filing to the Hong Kong Stock Exchange that sales in 2008 fell 3.4 percent to 3.69 billion yuan (US$540 million) and operating profit fell 27.6 percent to 417 million yuan (US$60.9 million). In 2007, both sales and profit grew more 20 percent.
The company reported that it made 15,000 injection molding machines in 2008, down from about 19,000 in 2007.
But Haitian officials downplayed the significance of that drop, saying the average selling price of its machines rose 20 percent in 2008, as the company boosted sales of more profitable large-tonnage and energy-saving machines.
Executive Vice President Helmar Franz told reporters that the company thinks it has seen the bottom for its domestic Chinese market, which accounts for about 60 percent of its business. But the global economic slowdown means its export market, which previously had seen stronger growth, is difficult to predict.
In terms of the Chinese market, I'd say yes, the Chinese market is picking up for us, he said at the April 2 news conference in Hong Kong. For the export market, who can tell? We are looking to the G20 [economic summit] ... for what will be done. So we will see.
The company said in a statement that it believes mainland China's economy can recover from the financial crisis at a faster pace than other countries.
Franz said the company believes China's economy is starting to rebound because the government's stimulus package is creating safe jobs and helping to restore confidence among Chinese consumers.
We see the positive impacts of such measures in discussion with customers, he said. I have talked to many customers. They are pretty confident. The consumer confidence returns.
He said the rebound since January also has been helped by a Chinese government decision to allow, as of Jan. 1, purchases of domestic-made machinery to qualify for a rebate of the 17 percent value-added tax.
The company is optimistic about longer-term prospects because Haitian is strongest in the developing economies with the most growth potential, according to Franz. Also, he said Haitian has created a new business unit to create machines for developing markets, and is retooling its existing factory in Wuxi, China, to manufacture the new machines, which it will sell under its Tianjin brand name.