UPDATE 1-China's Zoomlion says seeks to buy U.S. assets
(Adds executive's quotes, details; Xuzhou Construction)
By Fang Yan
SHANGHAI, Nov 25 (Reuters) - Chinese heavy machinery maker Changsha Zoomlion (000157.SZ) is seeking to buy assets in the United States, where manufacturers from automakers to parts suppliers, have been hit hard by the financial crisis, its president said on Tuesday.
Zoomlion, which won a joint bid with Goldman Sachs (GS.N) and two other investors earlier this year to buy Italy's Compagnia Italiana Forme Acciaio SpA, or Cifa, has already had talks on possible asset purchases in the United States, Jianguo Zhang told Reuters on the sidelines of an industry event.
"We have a foothold in Europe through the Cifa deal," Zhang said. "The current financial crisis in the U.S. could bring our next chance for cross-border acquisitions."
He gave no further details but played down the likelihood of any major moves within the next year, noting that the company would be focused on consolidating its operations after the Cifa deal, which was valued at 271 million euros ($342 million).
Zoomlion alone will pay 163 million euros for a 60 percent stake in the Italian construction machinery maker.
Zoomlion, based in central China's Hunan province, is among the growing ranks of Chinese machinery makers that have been building up their presence overseas in hopes of eventually competing with global leaders such as Caterpillar (CAT.N).
Its cross-town rival Sany Heavy Industry Co (600031.SS) has unveiled plans to build a $100 million plant near Atlanta to assemble concrete mixers, which would make it the first Chinese machinery maker to set up shop in the North American market.
POTENTIAL TARGETS
Xuzhou Construction Machinery (000425.SZ) group, the country's largest construction machinery maker, is also seeking to buy assets in developed markets, including the United States and Europe, its chairman Wang Min told Reuters on Tuesday.
Xuzhou Construction is looking for potential targets, preferably components manufacturers, Wang said, but he ruled out building a greenfield plant in those areas in the near term.
"Building plants there at a time like this would mean big losses. I won't even consider such a move," he said.
Several domestic machinery makers such as Guangxi Liugong Machinery Co (000528.SZ), a major maker of excavators, have been bruised by a sharp downturn in China's property market.
Liugong's net profit plunged 83 percent in the third quarter from a year earlier to 21.84 million yuan ($3.20 million).
Zoomlion, however, has been holding up well so far due to its broader product portfolio, which includes mobile cranes, tower cranes, earth-moving machinery and sanitation equipment, which are used widely in other industries.
Zhang expects the firm's 2008 sales and net profit to grow more than 50 percent from last year's 8.97 billion yuan in sales and 1.33 billion yuan in net profit.
However, its financial outlook next year is clouded by the unfolding global financial crisis and a slowdown in China's own economy.
"It's hard to provide guidance now as no one knows how long the financial crisis will last and how much worse it could get next year," he said.
The World Bank on Tuesday cuts its 2009 GDP growth forecast for China to 7.5 percent, the slowest pace of expansion since 1990.
Zhang said Zoomlion would nevertheless be able to achieve its target of boosting the overseas portion of its total revenue to 40 percent by 2010, from an expected 20 percent this year, bolstered by overseas acquisitions.
The longer-term target is to generate 60 percent of its sales outside China by 2015, he added. ($1=.7926 Euro) ($1=6.828 Yuan) (Reporting by Fang Yan; Editing by Edmund Klamann)
