Following the 2012 net income plummeting, Xugong again in 2013 net profit fell 38%. Net income continued to decline on April 8, Xugong (000425.SZ) announced the results of its 2013 financial report, the company last year, operating income was 26.995 billion yuan, down 16.12%; net profit fell sharply on the basis of 2012 on again, a larger decline, down 38.12 percent to 1.509 billion yuan. Over the past year, in addition to stronger Xugong full range of products, but also trying to make a breakthrough in the overseas market expansion and global distribution. According to financial reports, Xugong is currently advancing through the overseas market and overseas service parts distribution network to accelerate product development of the regional and global adaptability of various types of certification, its Brazilian integrated pilot production base is also achieved last year. Xugong last action frequently: advancing the internal capacity to adjust the overall release inventory capacity. Accelerate the construction of four bases along, planning and construction of high-end hydraulic valve base; Institute enabled the new site. European procurement center operations, integrated global supply chain system; completion of the 2.5 billion yuan convertible bond issue. However, many of the above efforts still could not wash industry against larger environment. Xugong said in its announcement, customers of its products mainly from the infrastructure, engineering and energy sectors, performance and macroeconomic conditions in these sectors are highly correlated, resulting in demand for products subject to greater impact of the economic cycle. According to financial reports, a small increase in inventories, while Xugong last year's sales volume fell 14.63% over 2012, production also fell 12.66 percent year on year. The increase in interest expense due to the formation of corporate bonds and bank loans increased Xugong financial costs soared 118% year on year. Currently, the company is located in China's machinery industry after more than ten years of rapid development, has entered the "Red Sea." As an investment-led industries, by fixed asset investment growth decline, lack of downstream demand, industry overcapacity affected products, the industry continues to decline in earnings last year. According to the China Machinery Industry Federation pains statistics, last year the annual total machinery industry achieved a total profit of 1.41 trillion yuan, up 15.6 percent over the previous year, growth accelerated more than ten percentage points higher than last year, the main business income growth higher than the same period 1.8 percentage points. However, loss-making enterprises reached 10.9%, compared with an increase of 0.47 percentage points last year, the amount of loss grew by 15.2%. http://www.17xiuli.com//news/class/ In fact, although some enterprises orders increased, but prices still in the doldrums. A statistical China Machinery Industry Federation show that last year the machinery industry key enterprises from January to December total order amount increased by 10.2 percent over the previous year, representing monthly growth rate rebounded slightly, but under the pressure of oversupply, prices continued to slump, By the end of last year, the price index for the month of 25 consecutive months below 100%. Executive vice president of the China Machinery Industry Federation CaiWeiCi has said that under the pressure of rising costs, the main activities of the upstream efficiency of enterprises more difficult: last year's main business costs continue to rise year on year growth and is always higher than the main business income growth speed, affected profit margin of only 6.57% main activity, down 0.41 percentage points compared with 2012. For this year's industry situation, CaiWeiCi believe that the basic stabilization of the macroeconomic situation and the trend of environmental and policy environment will remain stable development of the machinery industry to form good. According to the 2014 "Government Work Report", 2014 fiscal affordable housing projects focus on investment, agriculture, major water conservancy, Western Railway, energy saving and environmental protection, social undertakings and other fields. This provides a realistic demand for construction machinery industry, for the industry laid the foundation for the steady rise. Xugong forecast 2014 results, when sales revenue will increase to 290 billion yuan, an increase of approximately 7.6%. However, this does not make Xugong lightly: Although the future of the whole construction machinery industry will maintain a more robust demand environment, but in the short term, the construction machinery industry market trend depends on many factors, there will be a period of time departure from the overall situation. Currently, the formation of a large investment in machinery industry production release, the industry faces excess capacity and excess amount of pressure on the structure, while fixed asset investment growth rate declined in recent years, suppressed demand, coupled with the uncertainty of world economic recovery and trade the existence of barriers, construction machinery industry is still facing a large short-term demand pressures, the competitive environment remains intense. Outside concern is the future if the downward economic cycle leading to the country's fixed asset investment dropped significantly, will adversely affect Xugong product demand and profitability. In addition, if the company can not continue to maintain their core competencies in various product types, the risk of decline in market share. Miriam Bell 

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