ZhongDe 2015: Group revenue up 9 percent, but ebit decreased significantly

Quelle: ZhongDe Waste Technology AG

Frankfurt, Main — In 2015, ZhongDe Group focused on the progress of its current waste-to-energy projects. With the biggest build-operate-transfer project in Lanzhou, the group achieved remarkable progress. Nevertheless, the overall financial performance of ZhongDe could not be improved in line with the previous communicated forecast. Although the group revenue increased from € 35.0 million by 9 percent to € 38.2 million in 2015, this positive development could not be reflected in the bottom line. The EBIT decreased significantly from € 3.0 million to – € 13.2 million.

Although it was still a challenging transition period for the company in 2015, ZhongDe managed to keep its business operations on track, underlined CEO Zefeng Chen and CFO William Jiuhua Wang.

Facing increased competition

The Chinese Government prefers to cooperate with state-owned companies to undertake waste-to-energy projects. These companies have the advantage to obtain the concession agreements for waste-to-energy projects and various other supports from the government. As the number of state-owned companies in this sector has been increasing, ZhongDe is facing intense competition.

To counteract, the Management Board continues maintaining the strong ties with Chinese government bodies. The Management Board attended a number of waste-to-energy summit meetings in 2015. By this, ZhongDe strengthened its network in waste-to-energy industry and intensified marketing and sales activities to improve its market presence, the related influence and the image of ZhongDe Group in China.

The Management Board also negotiated with customers on new projects in 2015 and is optimistic that new orders can be signed in 2016. Nevertheless, the final closing of new contracts always depends on various factors, which are not affected by the sole decision of the Management Board, therefore it cannot be forecasted precisely due to the uncertainties. The order backlog amounted to € 135.6 million at the end of 2015 as basis to generate revenues and profit in the future and to maintain a strong position in the Chinese waste-to- energy market.

Outlook to 2017

Looking ahead to 2016 and 2017, the group expects to further benefit from the increasingly favourable political and economic environment for eco-friendly waste disposal, as well as from the growing demand for waste-to-energy plants, both in China and throughout Asia.

In short, ZhongDe’s Management Board expects that 2016 will remain a transition period, during which ZhongDe will complete existing projects, commence the operations and accelerate the progress of the project construction in Lanzhou. The Management Board expects a rapid growth in revenues and gross profit within 2016 compared to 2015. Accordingly ebitda and ebit for the period will follow that trend and turn to positive, although the net result could be negative. The outcome of the actual figures will be strongly dependent on the project development.

Due to the impact of the delays caused by government requirements, the availability of suppliers and the fluctuation of the RMB-Euro exchange rate, all forecasts contain some uncertainty.

The full annual report 2015 titled „Clean technology for the future“ can be downloaded under zhongde-ag.com.

Source: ZhongDe Waste Technology AG