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Sany and Zoomlion suffer sharp profit falls in the third quarter after funding pressures hit major construction projects on the mainlandThe mainland’s biggest construction machinery manufacturers, Sany Heavy Industry and Zoomlion Heavy Industry Science and Technology, reported sharply lower profits for the third quarter yesterday.自存倉Sany, which is listed in Shanghai, said net profit in the past three months dropped 54.3 per cent to 326.36 million yuan (HK$415 million) on revenue that fell 12.6 per cent to 7.82 billion yuan.For the first nine months of the year, net profit fell 49.3 per cent to 2.98 billion yuan.Zoomlion, which is listed in Shanghai and Hong Kong, reported net profit plunged 33.6 per cent to 889 million yuan in the quarter, while revenue dropped 12.6 per cent to 8.73 billion yuan.In an announcement to the Shanghai Stock Exchange, Sany said its parent company, Sany Group, would no longer undertake any research and development of new construction machinery products. This would now be done by Sany itself.On the market outlook, it said it expected sales to be weak.“The market is weak because some government projects are being put on hold because of lack of funding or tighter state credit,” said Joe Chan, an analyst at RHB OSK.Zoomlion reported that net cash flow from financing activities turned negative to minus 3.45 billion yuan at the end of last month, fr迷你倉m a positive 2.45 billion yuan at the end of last year, while net operating cash flow dropped 95.33 per cent to 8.36 million yuan from 179 million yuan.It attributed the sharp drop in operating cash flow to a decrease in its collection of sales revenue and loan repayments.Zoomlion’s rising past-due ratio – or the percentage of receivables past their due collection date – was “worrisome”, JP Morgan noted in a company report. “Receivable collectability remains a daunting task.”A receivable is an unpaid bill to a customer which has bought the firm’s products on credit.Despite tightening credit policy since the fourth quarter of last year, Zoomlion’s past-due ratio rose to 15 per cent in June from 9 per cent at the end of last year, JP Morgan said.Accounts receivable were up 35.6 per cent at 25.63 billion yuan at the end of third quarter from 18.9 billion yuan at the end of last year.Zoomlion was expected to tighten sales on credit to customers in order to reduce its high level of receivables, said an ABC International report. “Hence, sales growth will slow and we revise down our earnings forecast for 2013 to 2015.”ABC forecast that Zoomlion’s revenue was likely to decline 14.4 per cent to 41.14 billion yuan this year, while net profit would drop 26 per cent to 5.42 billion yuan.ABC’s previous forecast was revenue of 50.75 billion yuan and net profit of 7.14 billion yuan.mini storage