Franz

"We see some recovery in different fields, in different regions, especially in China, but still it is a tough environment,” Executive Vice President Helmar Franz told reporters at an Aug. 20 news conference in Hong Kong.

The Ningbo, Zhejiang province-based firm said in its earnings report to the Hong Kong Stock Exchange that it could not say if the economic downturn is over. But company executives said they have seen signs of recovery in their order books in the second quarter, and predict the upward trend will continue.

Haitian said sales of its small tonnage machines stabilized in the first half of 2009. While orders for large tonnage presses declined 50 percent compared to the second half of 2008, the company is seeing a gradual return of orders for those larger machines, boosting prospects for the second half.

Franz conceded that strong sales for the smaller machines could be “a little bit overheated” given the government stimulus spending flowing very freely into China’s economy. But he said the economic growth looked solid from his vantage point.

“Sustainability, this is very difficult to say,” he said, “but from the best of my knowledge, people are working again, the automotive business is good, the [information technology] business is still good. Packaging and medical are … good. There is a big recovery. The export market still did not rebound, so I am pretty conservative about what will happen in America and Europe.”

Whether China’s recovery is sustainable amid concerns that its government stimulus spending has produced an economic bubble, and whether other companies might share Haitian’s outlook, is an open question.

One of its larger rivals, Cosmos Machinery Enterprises Ltd., for example, was more downbeat, issuing a profit warning and telling the Hong Kong exchange Aug. 18 that it will likely lose money in the first half of 2009, although it maintained its overall outlook remains sound.

Haitian said it remained profitable in the first half of the year, but at dramatically reduced levels from 2008. The company said sales in the first half of the 2009 were down 16 percent, to 1.37 billion yuan, compared with the second half of 2008.

The company was hit particularly hard by export sales, which fell 50 percent.

But it said domestic Chinese sales grew 10 percent in the first six months of 2009, compared with the second half of 2008, as China’s government launched its 4 trillion yuan stimulus plan.

And it said second second-quarter 2009 sales were much stronger than the first quarter, with overall July sales returning to the level of July 2008, before the financial crisis.

In its filing, the company said sales in the second quarter of 2009 rose 58 percent from the dismal figures in the first quarter.

“Based on the steady increase in order intake in recent months, it is likely that our sales performance and profitability will be further improved in the remainder of 2009 if there is no major economic shock emerging,” the company said.

The company reported that first half 2009 profit of 110.3 million yuan, and claimed it was one of the few industry companies that remained profitable in the period.

“Because we are still profitable and we created a lot of cash and developed a lot of new products, we consider it successful,” Franz said.

As part of the plan to continue investing in higher-end presses, Haitian plans to expand the Ningbo facility of its Zhafir subsidiary that makes all-electrics, and remain on track with building a facility in Germany to manufacture Zhafir machines there.

As well, the company said it plans to introduce another, yet to be named, hybrid machine in 2011, to complete what it sees as a gap in the mid-range of its offerings.