Press releases

ZhongDe Waste Technology AG adjusted strategy for future growth in 2009

Hamburg, 31 August, 2009

 

Q2 revenues decreased by 7% year-on-year (YOY) to € 8.2m
Net profit fell down to € 34k from € 5.2m
Two large BOT (Build-Operate-Transfer) projects in Kunming & Xianning with total investment of RMB 800m (€ 81m)

 

ZhongDe Waste Technology AG ("ZhongDe", Ticker symbol "ZEF") revenues decreased by 7% YOY to € 8.2m in the second quarter of 2009. In the first half of the fiscal year 2009, ZhongDe's revenue decreased by €1.6m to €18.4m, compared to the first half 2008. In the same time period the EBITDA decreased by € 6.4m to € 4.5m.

 

The revenue decrease results from a lower number of sold small- and medium-size incinerators in Q2 of 2009. Some Chinese municipalities have postponed their purchase plans for the small-size incinerators due to reduced tax income as the consequence of the global economic crisis. The company has reacted on that market change by shifting its strategic focus to the market division of the large-size EPC (Engineering, Procurement and Construction) projects, such as the projects in Datong, Zhaodong and Zhucheng. Thanks to the high efficiency and stable cash inflow of the large-size incineration plants with electricity generation, these waste-to-energy projects are supported not only by the municipal authorities but also by the central government. Because of the stimulating economic packages from the Chinese central government, the demand for large-size waste-to-energy plants is increasing.


Regarding the profit development, the gross profit margin of EPC projects is normally lower than that of small- and medium-sized incinerators. As a result, the gross profit margin has decreased from 69% to 27% in Q2 2009 compared to the according reporting period in 2008. The net profit has decreased from € 5.2m in Q2 2008 to € 34k in Q2 2009, for the company began to pay company income tax in China in 2009 after the two-year tax holiday.

 

However, in spite of the investments for the new facility in Beijing, the company's net cash position was improved to € 115.8m as of June 30th, 2009.
CEO Mr. Zefeng Chen comments: "ZhongDe Group's business is successfully progressing through its long-term growth strategy. Although the company's performance has been affected temporarily by the global financial crisis, the large-size waste-to-energy market is still booming in China, for the policy from the Chinese central government to stimulate the internal demand is being launched step by step. The company is confident that it can continue taking advantage of the huge market potential in the Chinese waste-to-energy branch to create superior values."


In the course of Q2 2009, ZhongDe group signed two large BOT projects in Xianning and Kunming city with the total investment volume of RMB 800m (€ 81m). Both Kunming and Xianning projects guarantee the stable cash flow from electricity sales.


The company's new strategy for the long-term development includes international marketing, relocating its Chinese headquarters from Fuzhou, the capital city of Fujian Province, to Beijing, the capital city of China. It will strengthen ZhongDe's abilities in the field of HR, R&D, Sale & Marketing and Financing to help the company to develop competitive strength in the market of large-size waste-to-energy projects.


Screening for advanced technologies, ZhongDe has been negotiating with international companies in waste-to-energy branch, such as ThyssenKrupp Xeron Energy GmbH, etc. It will broaden ZhongDe's capability in conducting large-scale waste-to-energy projects and enhance its competitiveness in the international market.

 

 

Financial Highlights

 

Wesentliche Finanzkennzahlen

 

 

Outlook

The market environment is still uncertain and there has been great volatility in key business performance indicators, such as the Gross Domestic Product (GDP) in the first half of 2009. Therefore, ZhongDe Group refrains to forecast the revenues and earnings development for the current financial year. However, ZhongDe Group sees positive impacts on the business development in 2009: The government stimulus package is beginning to show signs of initial success and ZhongDe Group is directly benefiting from this in the segment of large-size waste-to-energy plants. Furthermore, the new R&D Center and the facility in Bejijing will increase our R&D and production capacities and thereby enable ZhongDe to fully benefit from China´s growing waste market.


 

 

About ZhongDe Group

ZhongDe Group designs, manufactures and installs pyrolytic, grate and rotary kiln waste incinerators for the disposal of solid municipal, industrial (including hazardous) and medical waste, as well as complete sets of incineration plants with electricity generation. Since 1996, ZhongDe Group has installed approximately 200 waste incinerators in about 13 provinces and more than 80 waste incinerators in the last three financial years alone. Its waste incinerators are principally constructed for small and midsized Chinese cities in developed areas of the People's Republic of China, as well as for operators of medical disposal centers in the hospital and healthcare industry. ZhongDe Group is one of the leading player of solid waste incinerators and waste-to-energy plants in China, supplying state-of-the-art products and advanced waste-to-energy technology.

 

 

Contact

William Jiuhua Wang
Executive Director and CFO
william.jw@zhongdetech.com

 

Li Zhong (Linda)
Investor Relations Manager
Stadthausbrücke 1-3
20355 Hamburg
Tel: +49 40 37644 756
Fax: +49 40 37644 500
E-Mail: li.zhong@zhongde-ag.de

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