Wuhan General Group
Wuhan General Group (China), Inc. is a leading manufacturer of industrial blowers and turbines in China. Based in Wuhan, Hubei Province, the group’s primary customers are from the iron and steel, power generation, petrochemical and other industries.
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Wuhan General Group revenues climb robustly, but margins suffer
Wuhan General Group (NASDAQ: WUHN)("Wuhan") a manufacturer of industrial blowers and turbines for power plants reported second quarter (three months ended June 30th, 2010) revenues of US$22.7 million, up 32% from the corresponding quarter in 2009.
Wuhan attributed the solid revenue growth to stronger sales into China's hydropower segment; during the quarter the company secured a US$4.7 million contract to supply blowers to Qinghai Huanghe Hydropower Development.
The strong lift in second quarter revenues helped the group report net income of US$0.4 million compared to just US$0.018 million in Q2 2009. Earnings per diluted share swung from a loss of 1 cent in Q2 2009 to a profit of 1 cent in Q2 2010.
" We are particularly pleased with the performance of our hydropower segment, which accounted for more than 60% of all turbine sales. Moreover, tighter control over selling and general and administrative expenses also helped improve our profitability year-over-year," said Ruilong Qi, the CEO of Wuhan General.
The numbers from Wuhan were not all rosy however, the company also reported that gross margins declined as it witnessed faster growth from lower margin products and continued to see strong competition for business. Gross margin was 21.3%, down 2.5 percentage points from 23.8% for the same period in 2009.
For the six months ended June 30, 2010, total revenue was US$40.6 million, up 15.4% from $35.2 million in the same period of 2009. Earnings per diluted share were 7 cents for the six months ended June 30, 2010 compared with 3 cents per diluted share for the corresponding period in 2009.
As of June 30, 2010, Wuhan General had $24.6 million in cash and $54.2 million in accounts receivable compared to $0.4 million and $54.0 million respectively as of December 31, 2009.
Looking ahead to the second half of 2010, Wuhan said it expected demand for blowers and turbines to stabilize as steel mills continue invest in upgrading their operations and China's hydropower industry maintains its expansion.
