Robust growth in construction machinery profits indicate improving economic outlook
China's leading heavy equipment manufacturers forecast significant profit growth in the first quarter of 2019, mirroring the country's improving economic fundamentals.
Profit of Sany Heavy Industry Co. Ltd. was expected to surge by 100 to 120 percent, the company said in its latest statement Monday.
XCMG Construction Machinery Co. Ltd. (XCMG) forecast its Q1 profit to stand at between 950 million yuan (about 141.6 million U.S. dollars) and 1.15 billion yuan, climbing by 83 to 121 percent, while Zoomlion Heavy Industry Science and Technology Co. Ltd. forecast a profit surge of 126 to 179 percent.
Companies attributed the robust Q1 performance to the upturn of the country's construction machinery industry.
XCMG expects steady expansion of revenue in Q1 from the same period last year thanks to strong market demand.
Sany also said factors including the rising demand from infrastructure construction and equipment replacement contributed to the rapid growth of the construction machinery industry in Q1.
Sales for China's major excavator producers, an indicator of the vitality of an economy, also posted notable growth in Q1.
The country's 25 leading excavator makers sold 74,779 units in the first three months, climbing 24.5 percent from the previous year, data from the China Construction Machinery Association showed.
Founder Securities forecast that leading construction machinery enterprises would maintain rapid growth of net profit in 2019 due to continuous demand growth of equipment replacement and export.
The growth of China's construction machinery industry was in line with the upward trend of the country's infrastructure investment, which grew 4.3 percent year-on-year in January-February, up 0.5 percentage points from 2018.
The country planned to boost infrastructure investment for areas including intercity transportation, logistics, and civil and general aviation, investing 800 billion yuan in railway construction and 1.8 trillion yuan in road construction and waterway projects, according to the 2019 government work report.
Besides infrastructure construction, recent data also showed more signs of an improving economic outlook for the world's second largest economy.
China's purchasing managers' index for manufacturing sector saw its first acceleration in months in March, indicating expansion of the country's factory activity.
Consumer prices rebounded solidly in March, while producer prices picked up for the first time in nine months, easing market fears over deflation risks in the Chinese economy.
China's foreign trade registered stable growth in the first quarter, with exports in March posting 21.3-percent growth in yuan terms, much higher than market expectations.