Dongfang turns to clean-energy equipment
Dongfang Electric Corp expects new coal-fired equipment orders to continue to fall this year, but the nation's largest power generation equipment producer plans to make up for the shortfall from clean-energy equipment.
The Sichuan-based firm received 56.8 billion yuan (HK$64.5 billion) of new orders last year, down from 70 billion yuan in 2008, while the backlog of orders rose to 130 billion yuan, about four times last year's sales, from 120 billion yuan a year earlier.
President Wen Shugang said coal-fired equipment orders had been declining this year after falling to 26.3 billion yuan last year from 31.6 billion yuan in 2008. Coal-fired equipment took up 46.3 per cent of last year's orders, compared with 25.5 per cent for nuclear, 14.6 per cent for wind and 5.1 per cent for hydro equipment.
'We hope new orders for hydro, nuclear and wind equipment as well as environmental protection-related equipment will offset the decline,' he said.
Dongfang's order book is a leading indicator of the nation's decreasing reliance on coal-fired power as Beijing encourages rapid development of clean energy projects and slows approvals for new coal-fired plants. Coal-fired power stations accounted for three-quarters of the nation's total generating capacity by the end of last year.
Dongfang last week posted a 282 per cent jump in net profit to 1.74 billion yuan with sales rising 18.2 per cent to 32.8 billion yuan, largely because it was coming off a low comparison with 2008 when the Sichuan earthquake put a 1.54 billion yuan dent in earnings.
Profit was also lifted by wind equipment production, with the gross margin jumping to 16 per cent from 10 per cent in 2008 as volume grew by half to 1,203 units while fixed operating costs were cut.
But Wen warned that margins were under pressure due to keen rivalry from more than 70 other producers. Dongfang is China's third-largest and the world's seventh-largest maker of wind turbines, he said.
Its nuclear division booked a slight loss last year, but board secretary Gong Dan said it would 'definitely' record a profit this year, since its 57.3 per cent-held nuclear subsidiary was projected to see a net profit of 160 million yuan on 2.3 billion yuan of sales. The Guangzhou-based unit is expected to have a gross margin of about 19.5 per cent this year.
