Sany Heavy Industry (Sany), China’s biggest maker of construction equipment, may cut its excavator sales forecast for this year as government's efforts to curb property speculation slow constructions.
“Given the weak market, I think there’s a need to adjust our sales target,” Xiang Ru’an, Sany's vice president, said in a phone interview. The company, based in Changsha, Hunan, had expected to boost sales 41% from last year to 29,000 excavators, he said, without elaborating on the size of the potential target cut.
Nationwide excavator sales plunged 41% in the first quarter, according to the China Construction Machinery Association, as falling house prices and a slowdown in new railways damped demand. The slump has weighed on Sany’s sales even as its wins market share from Komatsu Ltd. (6301) and Caterpillar Inc., and adds bigger models used in mining.
Sany aims to boost its share of China’s excavator market to 20% among major brands from 13.8% last year, Xiang said. The company plans to win customers with large, low-cost models that can compete with overseas makers’ products, he said.
“We will keep the market-share goal,” Xiang said. “This is the key for staying competitive.”
The company’s first-quarter market share climbed 7%age points to 18%, according to an April 28 statement. Sales totaled 7,000 excavators, it said, without giving year-earlier numbers.
Sany expects mining to account for as much as 20% of its excavator sales this year from less than 10% last year, Xiang said. Construction’s share will probably slip to about 30% from more than 40%, he said.
The company, run by China’s second-richest man, Liang Wengen, fell 0.5% to 14.81 yuan at the close of trading in Shanghai. It has climbed 18% this year, outperforming the benchmark Shanghai Composite Index’s 11% gain.
To help boost sales overseas, Sany last month completed the 360 million euro ($470 million) acquisition of German concrete- pump maker Putzmeister Holding GmbH. China Communications Construction Co. has also agreed to use Sany concrete-pump trucks, excavators and crawler cranes for a project in Qatar. The work includes developing a port and a stadium for the 2022 soccer World Cup.
China’s home prices fell to a 14-month low in April as the government pledged to maintain property curbs, according to SouFun Holdings Ltd., the nation’s biggest real-estate website owner. Construction of new rail lines has slowed after a fatal- train crash and monetary tightening last year.