A veteran machine tool giant has suffered consecutive losses in non-GAAP net profit for two years?

In 2024, China's industrial machine industry will struggle.

Data from China Machine Tool Industry Association show that in 2024, the industry's operating revenue will fall by 5.2% year on year, the total profit will fall by 76.6%, and the industry's gross profit margin will be compressed to a low level.

As a veteran leader, the revenue of Qinchuan Machine Tool (000837.SZ) increased slightly by 2.62% to 3.86 billion yuan, and the net profit attributable to the parent was 53.78 million yuan, up 2.92% year on year. However, the net profit excluding non-recurring items has been in deficit for two consecutive years, and the net profit in 2024 expanded to-45.1701 million yuan. The profitability of the main business continues to lose blood, relying on government subsidies.

Source: Qinchuan Machine Tool Announcement

The reporter of the *Everyday Economic News* noted that the company's early layout in the robot reducer business has given it a first-mover advantage in terms of technological accumulation. However, this product is primarily used in the industrial robot sector and needs to compete with imported products on the same stage. In the face of the current surge in the humanoid robot industry, its harmonic reducers are still in the research and development and trial production phase, without plans for large-scale production.

For now, the robot reducer business accounts for only a single-digit percentage of qinchuan's total revenue.

Qin Chuan machine tool secretary office related people told reporters that in the fourth quarter, affected by the policy, Qin Chuan has a relatively strong performance in the recovery of orders, but because of product characteristics, some high-end customized products delivery cycle is 6 to 8 months, which will be reflected in the performance lag.

Non-net profit for two years is negative

As the national heavy machinery and industrial cornerstone, the industrial machine is in the core link of the manufacturing industry chain.

As an industry leader, Qinchuan Machine Tool has the manufacturing capacity of machine tools and parts, and is in the first echelon in China in gear machining machine tools, machining centers, turning centers, thread grinders, complex cutting tools and other fields. At the same time, it can also provide machine tools and parts products for downstream industries such as robots and new energy vehicles.

According to the annual report, in 2024, the operating income and net profit of Qin Chuan machine tool both achieved a slight increase, with a year-on-year growth of 2.62% and 2.92% respectively.

But in fact, the non-net profit of Qinchuan machine tool has been in the red for two consecutive years.

In 2023, the overall demand of machine tool industry weakened, the total order volume declined, while the price fell and the cost rose, which compressed the profit space of enterprises in both directions. The non-net profit of Qinchuan machine tool was-34.6662 million yuan, down 155.56% year on year.

In 2024, the downstream demand for machine tools is showing significant differentiation. The demand for high-end machine tools in the new energy vehicle and aerospace sectors is growing, but investment in traditional manufacturing is weak, leading to increased overcapacity at mid-to-low-end levels and intensified price competition. As a result, QinChuan Machine Tools' non-recurring net loss was-45.17 million yuan, with losses slightly expanding compared to the previous year.

Every reporter noted that Qin Chuan machine tool can maintain a positive net profit basically depends on government subsidies.

In 2024, the total non-recurring profit and loss of Qinchuan Machine Tool is 98.95 million yuan, among which the government subsidies included in the current profit and loss amount to 119 million yuan. If the subsidy is excluded, the actual loss of the company is far more than the book.

In terms of products, the operating revenue of machine tools was 1.947 billion yuan, accounting for more than half of the total revenue, an increase of 9.35% compared with the same period last year. The operating revenue of parts and components was 1.374 billion yuan, accounting for 35.59%, a slight decrease compared with the same period last year.

Source: Qinchuan Machine Tool Announcement

According to its annual report, in 2024, the export of high-tech and high value-added products such as high-precision gear machining machine tools, CNC grinding machines and CNC lathes of Qinchuan Machine Tool will increase significantly, and the annual export revenue of machine tools will increase by 35% year-on-year. The export of parts and components will be exported to Spain, Germany and other European countries.

At present, some downstream industries of machine tools have been in the recovery stage. Especially at the policy level, under the catalysis of the "large-scale equipment renewal" policy, the industry operation in 2024 showed a trend of low in front and high in back, which had an obvious pulling effect on the machine tool industry, and the demand side of the main products showed growth.

"The overall situation of the industry in 2024 is expected to be low in the first half and high in the second half. However, the situation for Qinchuan and the entire industry is slightly different. We have a higher performance in the first half compared to the second, but due to policy impacts in the fourth quarter, we performed better than in the third quarter." A relevant person from Qinchuan Machine Tool's board secretary office stated that as a manufacturer of equipment, Qinchuan is downstream in terms of policy transmission. In the fourth quarter, there was a strong recovery in orders, but due to the characteristics of some high-end customized products, with delivery cycles ranging from 6 to 8 months, this has led to a lag in performance metrics.

In addition, every reporter noted that Shaanxi Hanjiang Machine Tool Co., LTD., a subsidiary of Qinchuan Machine Tool, also dragged down the company's operating conditions. In 2024, its net profit was-19.08 million yuan, compared with-787,000 yuan in the same period last year, and the loss also increased.

"In terms of business composition, Hanjiang Machine Tool has both machine tool and parts businesses. In 2024, the revenue decline for both segments exceeded 10%." The relevant person further stated, "Machine tool orders have shown strong rebound since November 2024, but due to the delivery cycle of machine tools, performance is expected to materialize in the first half of 2025; the parts business mainly focuses on lead screws, with 60% of the market coming from other domestic machine tool companies. If the industry performs poorly, this product's revenue will inevitably be affected."

The impact on robotics is limited

Qinchuan Machine Tool is an old machine tool leader, which has been rooted in the field of machine tools for many years and has profound technical background. Its layout in the field of robotics can also be said to have "started early".

In 2012, when the domestic robot industry was still in its infancy, Qinchuan Machine Tool laid out the field of robot reducer in a forward-looking way and became one of the first enterprises to research and develop RV reducer in China. In 2013, Qinchuan Machine Tool invested 194 million yuan to implement the industrial robot joint reducer industrialization project.

By 2016, the technical accumulation of Qinchuan has begun to show results: the reducer products have broken through small batch production, and customers cover mechanical arms, welding and other scenarios, with more than 100 domestic and foreign customers.

In 2018, the robot reducer of Qinchuan Machine Tool experienced an explosive growth, with its production capacity rising to 2000 units/month, and its sales revenue surging by 141% year on year. The number of customers exceeded 260. Its product line gradually expanded to five series and more than 140 kinds of speed ratios, making it one of the most complete reducer manufacturers in China.

Although the specific revenue of robot reducer is not announced, the proportion of parts in the total revenue of Qinchuan is increasing year by year. Take 2018 as an example, the operating income of parts products where reducer is located increased by 14.52%, becoming the sector with the most rapid growth in the main business revenue in that year.

Qin Chuan laid out the industrialization of robot joint reducers in 2013, with an initial investment of over 400 million yuan in production capacity construction, which has been basically completed. By the end of 2021, the first phase of the project had an annual production capacity of 60,000 to 90,000 units. If the second phase is fully completed, it will have an annual production capacity of 180,000 units. The relevant person informed the reporter.

The aforementioned individual further stated that the entire reducer market is roughly less than 4 billion yuan, with 50% to 60% being imported and the remaining 40% to 50% domestically produced. The RV reducer industry currently has a low rate of domestic production, and QinChuan is in the first tier of the domestic market. "Given that the downstream market for industrial robot joint reducers has not met expectations, Phase II has not been initiated yet."

It can be clearly seen that in 2020, after the major shareholder Fost Group took over, Qinchuan Machine Tool started the "slimming and fitness" reform, focusing on the "main engine + core components" drive, and then the focus of the two rounds of financing was inclined to high-end intelligent machine tools and new energy vehicle parts.

In recent years, with the rapid development of artificial intelligence and robotics technology, the robotics industry has seen explosive growth. Among these, RV reducers play a crucial role in high-precision transmission; harmonic reducers, with their lightweight joints and compact size, are highly favored in the production of humanoid robots.

It is predicted that by 2027, the wide application of humanoid robots will create a large production gap of harmonic reducers and RV reducers.

As the earliest RV reducer enterprise, Qinchuan's layout and development in the robot track has attracted much attention from the market.

In the secondary market, since this year, driven by the wave of humanoid robots, Qin Chuan has also performed well. For example, on April 2, Qin Chuan Machine Tool was seized by institutions due to the dual concept of "robot + industrial mother machine", with a net purchase of more than 100 million yuan in a single day.

Every reporter noted that in the 2024 semi-annual report, it revealed that the sales and revenue of high-precision transmission robot joint reducer increased by more than 25% year-on-year during the reporting period.

In its annual report, Qinchuan Machine Tool stated that it currently offers five series of industrial robot joint reducers with over 40 specifications and more than 140 gear ratios. It has also successfully developed CNC screw grinding machines and thread grinding machines for the humanoid robot field. In February 2025, it disclosed that it had completed the research and development of six harmonic reducer products.

However, according to the understanding of each reporter from the Economic Daily, as of now, the revenue of Qinchuan Machine Tool's robot reducers mainly comes from RV reducers. The harmonic reducers are still in the research and development and trial production stage, with no plans for large-scale production, making the product range relatively limited. Moreover, the revenue from robot reducers accounts for only a single-digit percentage of Qinchuan's total revenue, contributing relatively limited performance.

"The demand for harmonic reducers in humanoid robots is still in the very early stages of marketization. In this situation, the domestic market competition for harmonic reducers is actually very intense, far exceeding that of RV reducers. We will not rashly expand production in a field where capacity is currently relatively abundant," said the relevant person.

Note: This news is reproduced from the National Business Daily.