The growth rate of excavator exports “returns to positive”, Construction machinery capacity exports accelerate
According to statistics from the China Construction Machinery Industry Association on major excavator manufacturers, 14,600 excavators of various types were sold in August 2024, an increase of 11.8% year-on-year, of which 7,953 were exported, an increase of 6.95% year-on-year, returning to positive growth for the first time this year; from January to August, a total of 131,600 excavators were sold, a decrease of 2.21% year-on-year, of which 65,200 were exported, a decrease of 10.3% year-on-year.
According to the announcement of Sany Heavy Industry (SH600031, stock price 15.29 yuan, market value 129.6 billion yuan) on the evening of September 9, the company’s small excavator products have achieved 6 consecutive months of growth this year, and the growth rate has accelerated month by month, and medium and large excavator products have also stabilized and rebounded; in August this year, the sales volume of small excavators in China increased by 51% year-on-year, medium excavators increased by 44%, and large excavators remained the same, and the sales volume of small excavators overseas increased by 16% year-on-year, medium excavators increased by 32%, and large excavators increased by 63%.
The growth rate of excavator exports “returns to positive”
According to the China Construction Machinery Industry Association, from January to July this year, the year-on-year growth rate of excavator exports was negative, among which February fell by 32% year-on-year, the largest decline, and from March onwards, the decline gradually narrowed, and the decline in July was 0.51%, which was close to positive growth.
It is reported that in recent years, China’s downstream demand for construction machinery has been shrinking and bottoming out. Exports have become an important growth point to support the development of construction machinery companies. Overseas sales account for half of the sales volume of major products and the revenue of leading companies. Chinese brands rely on overseas expansion to effectively make up for the domestic revenue gap and improve the overall profitability. The production and operation of leading companies with good export performance are expected to remain stable.
Data shows that Sany Heavy Industry, XCMG (SZ000425, stock price 6.07 yuan, market value 71.7 billion yuan), Zoomlion (SZ000157, 5.90 yuan, market value 51.2 billion yuan) as the “three giants” of domestic construction machinery, all showed a slight fluctuation in revenue and an increase in net profit attributable to the parent company in the 2024 semi-annual report.
Sany Heavy Industry disclosed that in the first half of the year, it achieved overseas sales revenue of 23.542 billion yuan, a year-on-year increase of 4.79%. Overseas revenue accounted for 62.23% of its main business revenue, exceeding 60% for the first time; the gross profit margin of its overseas main business continued to increase to 31.57%, up 0.56 percentage points from 31.01% in the same period last year.
Xugong Machinery disclosed that in the first half of the year, its revenue from overseas reached 21.9 billion yuan, a year-on-year increase of 4.8%, and its international revenue accounted for 44%, an increase of 3.37 percentage points year-on-year; the comprehensive share of overseas product terminal sales was 4.43%, an increase of 0.58 percentage points year-on-year, and the gross profit margin also increased to 24.41%, an increase of 1.22 percentage points year-on-year.
Zoomlion disclosed that its overseas revenue in the first half of the year was 12.048 billion yuan, a year-on-year increase of 43.90%, and its revenue share increased to 49.10%, an increase of 14.32 percentage points year-on-year, and its gross profit margin was 32.13%, an increase of 0.35 percentage points year-on-year.
In this regard, XCMG said that since the beginning of the year, the situation of the construction machinery industry has been weaker than expected, the domestic market has been declining at a low level, and the overseas market has stalled growth. However, compared with the domestic market, which is in the bottoming stage of the big cycle, the overseas market has huge space and low cyclical volatility. The increase in the proportion of overseas revenue is expected to further drive the company’s operating performance and profitability, thereby steadily crossing the industry cycle.
Construction machinery capacity exports accelerate
According to Sany Heavy Industry’s announcement on the evening of September 9, from January to August this year, the company’s sales in Africa reached 3.5 billion yuan, an increase of more than 60% year-on-year. Since entering Africa in 2002, the company has sold more than 20 billion yuan of equipment and has more than 23,000 equipment units, ranking first among Chinese construction machinery companies exporting products to Africa.
So far, the company has provided sales services in 52 countries and regions in Africa (a total of 61 countries and regions in Africa), and has established 4 countries, 14 subsidiaries, 8 agents, and 50 service outlets in Africa, with a localization rate of more than 60%.
It is worth noting that for the export growth in the first half of the year, Sany Heavy Industry stated in its semi-annual report that the company has promoted the continuous optimization of global resource allocation through organizational globalization, R&D globalization and manufacturing globalization. Among them, the expansion of the second phase of the Indonesian factory was completed in the first half of the year, and the second phase of the Indian factory and the South African factory are under orderly construction.
In this regard, CITIC International Research Report analyzed that in recent years, the overseas channel layout and after-sales market of domestic enterprises have been increasingly improved, the progress of international product R&D has been accelerating, the product quality has been improved, and the product line coverage has been more comprehensive. At the same time, the transformation from “product export” to “capacity export” has been completed, and the pace of overseas factory construction and localized operation has accelerated.
Domestic engineering machinery equipment has advantages in cost-effectiveness and supply chain. In addition, in recent years, the overseas channel layout and after-sales market have been increasingly improved, the progress of international product R&D has been accelerating, the product quality has been improved, and the pace of overseas factory construction and localized operation has been accelerated, and the international competitiveness has been continuously enhanced.
According to the list of the top 50 global construction machinery companies released by International Construction, a magazine under the British KHL Group in June 2024, a total of 13 Chinese companies were on the list. In 2023, the total revenue of the above companies was US$41.826 billion, of which 44.24% came from overseas markets, a significant increase of nearly 8 times compared with 10 years ago, and the effect of international layout was remarkable.
However, the challenges faced by construction machinery in the process of going overseas, such as trade frictions, intensified competition, exchange rate fluctuations, high freight rates and limited credit sales financial resources, have also attracted much attention. At the same time, the overall global market share of Chinese companies has declined, on the one hand due to the sharp contraction of domestic sales, and on the other hand due to the gradual recovery of overseas brand supply chains.
XCMG, Sany Heavy Industry, Zoomlion and LiuGong (SZ000528, share price 9.78 yuan, market value 19.35 billion yuan) have market shares of 5.3%, 4.2%, 2.4% and 1.6% in the global construction machinery industry respectively. According to a research report by CITIC International, the overseas market share of domestic enterprises is still relatively low compared with Caterpillar and Komatsu, and there is much room for improvement in the future. It is expected that there will still be great potential for overseas construction machinery market demand and market expansion of Chinese enterprises in the future.
