China Wind Systems cuts 2010 forecast despite earnings growth in Q3

(ADPnews) - Nov 16, 2010 - Wind power components supplier China Wind Systems Inc (NASDAQ:CWS) posted on Tuesday a third-quarter net profit of USD 3 million (EUR 2.2m), up by 19% year-on-year, but cut its earnings projections for the full year.

The downgraded outlook came after the company's new electro-slag re-melted (ESR) facility failed to reach its gross margin targets in time.

China Wind Systems trimmed its net profit guidance for the full year to USD 12 million from USD 15.5 million-16.3 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) are now seen at USD 20 million, compared with USD 22.7 million-25.2 million previously forecast. Revenue expectations, though, remain in the range of USD 76.5 million-85 million.

EBITDA for the third quarter was USD 5.1 million, up 28.2% on the year.

Total revenue went up by 31.8% to USD 21.3 million, thanks to higher sales of forged rolled rings and related components for the wind power sector, which accounted for 58.4% of the total.

The company expects the performance of its wind power operations to continue to improve, based on analyst estimates that in the coming 10 years the Chinese government will invest up to CNY 1.5 trillion (USD 226bn/EUR 166bn) in the wind power sector.

"We also see potential expansion and growth opportunities in different industries within the alternative energy sector, such as our recent conditional purchase contract to supply precision components for solar cell manufacturing equipment," chairman and CEO Jianhua Wu said.

(USD 1 = EUR 0.737)

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