Exports bring strong growth at Yongmao

In its 2008 financial year the company recorded revenue of CNY652.8 million (US$94.2 million) compared to CNY278.3 million ($40.1 million) the previous year. “The strong revenue growth of 134.6% was due to increasing recognition of the group’s brand of tower cranes by the international market. In addition, there was an increase in demand for the group’s tower cranes from existing customers.”

This increase was driven by the construction industry in the Middle East, America, Europe, China and Asia. The group also recorded first time sales to markets including the Ukraine, Malaysia and Australia. In line with increased in revenue, sales were CNY410.6 million ($59.2 million) in the latest financial year was CNY238 million ($34.3 million) or 137.9% higher than the 2007 financial year.

Similarly, gross profit rose by 129.2% to CNY242.2 million ($39 million). Average gross profit margin in the 2008 financial year was 37.1%, compared to 38.0% in 2007. “The slight decrease in margin was mainly due to the higher cost of steel. During the financial year, the group has increased its selling price to some of its customers,” said Yongmao.

Operating income increased by CNY2.2 million ($317,300) in the year mainly due to an increased government grant of CNY1.3 million ($187,495) following more exports and an increase in interest income.

Operating expenses increased by CNY64.0 million ($9.2 million), 136.2%. “Major cost increases included a higher headcount and bonuses, higher distribution costs - mainly freight and transportation, higher corporate expenses on conversion to a listed company and exchange loss, arising from a weaker US dollar,” commented Yangmao.