Tough first half for CRRC amid overcapacity, slower deliveries

The world’s largest train manufacturer’s profit slumped in the first half. CRRC saw its first-half net profit decline by 23.41 percent year-on-year to 3.67 billion yuan ($552.17 million), with revenues standing at 88.72 billion yuan, down 5.83 percent year-on-year.

BEIJING: First-half profit of CRRC Corp, the world’s largest train manufacturer, fell 23.4 percent year-on-year to 3.67 billion yuan ($552.17 million), with revenue down 5.8 percent to 88.72 billion yuan, its financial statements showed on Friday.

The first half was “extremely difficult” for CRRC, but the group sought to deal with tough conditions through “stabilizing income and lifting up profit” and those efforts had paid off, the company said in the statement.

Railway equipment sales slid 11 percent due to a “major shrinking in product deliveries,” while revenue from urban railway rolling stock jumped 35.3 percent, CRRC said.

Notably, the Chinese Standard Multiple-Unit Fuxing train series, manufactured by CRRC, began service in the first half on the Beijing-Shanghai high-speed line.

Meanwhile, revenues from the Chinese mainland and overseas market plunged 5.97 percent and 4.52 percent, respectively, from the same period last year, according to the statement.

The slumps highlight the uncertainties that train equipment suppliers will face in the near future, as the group, which was formed in June 2015 through a merger of two top trainmakers (China North Railway and China South Railway) has faced overcapacity in its rail transit sector and a slowdown in the country’s domestic railway market, news website reported over the weekend, citing industry experts.

CRRC hopes to optimize its product structure to cope with “structural adjustment in market demand.”

But the company noted that China’s investment in the railway sector is expected to exceed 3.5 trillion yuan by 2020, with investment in railway equipment predicted to reach 500 billion yuan.

CRRC also stressed its capacity to explore overseas markets. “CRRC’s products have been exported to 102 countries and regions. China’s high-speed railways are becoming the calling cards of China’s high-end equipment,” said the statement.

In the first half, CRRC received orders for subway and heavy rail cars from Boston, Los Angeles, and Philadelphia. Exports to Iran, Pakistan, Thailand and Argentina are also under way, according to the statement.

The Shanghai-listed company’s shares closed at 9.91 yuan on Friday, up 0.92 percent from the opening.