Chinese injection moulding machinery manufacturer Chen Hsong Holdings (Hong Kong; www.chenhsong.com.hk) has issued a profits warning saying that it expects to record a considerable year-on-year decline in turnover leading to a “significant decrease in net profit for the year ended 31 March 2009.” It added that, although there had been a slight improvement in turnover in March 2009, the future market condition still remains depressed and that it has been taking measures to reduce capital expenditure and implement cost-cutting exercises to counter the economic challenge.

The company said that its customers were reluctant to make significant capital investment in new and replacement machinery at this time and that its order book had been hit. It added that its cash position remains healthy and that it continues to maintain sufficient working capital to capture market share when the economy recovers.

Chen Hsong Holdings reported net profits of HKD 116m (EUR 11.3m) for the six months ended 30 September 2008, down from HKD 189m in the same period of 2007. Sales were down 3% year-on-year to HKD 1.17 bn in the half year. Sales in China, including Hong Kong, fell by 16% year-on-year, while Taiwan and other overseas markets saw increases in sales of 35% and 25% respectively.