In the first three quarters of 2026, the Chinese construction machinery industry presented a seemingly contradictory report card: revenue was rising while profits were falling.

Sany Heavy Industry, XCMG Machinery, Zoomlion Heavy Industry Science and Technology, and Liugong account for 60% of the industry's revenue and profits, but three of them increase revenue and reduce profits. In the first three quarters, Sany Heavy Industry was the only company to achieve both revenue and profit growth. XCMG Machinery had the largest revenue scale but saw a slight decline in profits, while Zoomlion had the largest decline in profits while experiencing revenue growth. LiuGong also had problems with revenue growth and profit decline.

The performance of the four leading construction machinery companies is quite representative. According to Wind statistics, the overall revenue scale of the construction machinery industry in the first three quarters was 335.8 billion yuan, a year-on-year increase of 13.4%; The net profit was 27.4 billion yuan, a year-on-year decrease of 4%. Among them, the operating revenue in the third quarter increased by 11.5% year-on-year, while the net profit decreased by 0.5% year-on-year. What has dragged down the profits of the entire industry?

Exchange caused a loss of 7.9 billion yuan across industries

In the first three quarters, most of the top construction machinery companies increased revenue and reduced profits. According to the financial report, Sany Heavy Industry's revenue was 78.11 billion yuan, a year-on-year increase of 18.81%, and its net profit attributable to the parent company was 8.004 billion yuan, a year-on-year increase of 12.22%; XCMG Machinery's revenue was 86.888 billion yuan, a year-on-year increase of 11.17%, and its net profit attributable to the parent company was 5.608 billion yuan, a year-on-year decrease of 6.18%; Zoomlion's revenue was 40.019 billion yuan, a year-on-year increase of 7.71%, and its net profit attributable to the parent company was 2.961 billion yuan, a year-on-year decrease of 24.46%; Liugong's revenue was 28.939 billion yuan, a year-on-year increase of 12.34%, and its profit was 1.325 billion yuan, a decrease of 9.13%.

The direct reason for the decline in profits is exchange rate losses. In the first three quarters, according to Dongwu Securities' calculations, Sany Heavy Industry suffered a foreign exchange loss of approximately 2.97 billion yuan, compared to a foreign exchange gain of approximately 280 million yuan in the same period last year; XCMG's financial expenses soared from about 250 million yuan in the same period last year to 2.15 billion yuan, mainly due to exchange losses; Zoomlion incurred a foreign exchange loss of 964 million yuan, and after deducting the after tax foreign exchange impact, the net profit attributable to the parent company was 3.781 billion yuan, a year-on-year increase of 1.87%, returning to the positive growth range.

This is not an isolated phenomenon. Among the 22 engineering machinery sample listed companies surveyed by Wind, exchange rate fluctuations in the first half of the year alone had an adverse impact on overall profits of approximately 7.9 billion yuan.

The reason why foreign exchange can cause such a significant disturbance to the profits of the entire industry is due to the fact that Chinese construction machinery companies' overseas business is already large enough.

According to data compiled by the General Administration of Customs, China Construction Machinery Industry Association reported that from January to September 2026, the export value of construction machinery in China was 53.514 billion US dollars, a year-on-year increase of 22%; In September, exports amounted to 6.952 billion US dollars, a year-on-year increase of 31.9%. 109744 excavators were exported, a year-on-year increase of 30.4%; In September, the export of excavators accounted for 56.4% of the total sales volume, and as of September, it has been continuously growing year-on-year for 26 months; 58717 loaders were exported, a year-on-year increase of 34.2%, with a growth rate 17.5 percentage points higher than domestic sales.

The overseas revenue of top construction machinery companies generally accounts for over 50%. Sany Heavy Industry's overseas revenue accounted for 61.3% in the first half of 2026, making it the leading company to break through 60%. XCMG Machinery's overseas revenue proportion exceeded 50% for the first time in the first half of 2026. Zoomlion's overseas revenue in the first three quarters was 23.137 billion yuan, accounting for 57.81%, an increase of 0.45 percentage points year-on-year. The proportion of overseas revenue of second tier enterprises such as Shantui Co., Ltd. and Shanhe Intelligent has also exceeded 60%.

Overseas business not only contributes more revenue, but also contributes higher gross profit margins. According to brokerage calculations, in the first half of 2026, Sany Heavy Industry's overseas main business gross profit margin will be 32.5%, which is 11.81 percentage points higher than its domestic business; XCMG Machinery's overseas gross profit margin is 25%, which is 6 percentage points higher than the domestic and overseas gross profit margins.

Sany Heavy Industry stated in its performance communication that the company is accelerating its upgrade from "product export" to "industry going global". The localization rate of complete machines in the Indonesian factory has increased to 75%, driving a 9.6% decrease in production costs; The Brazilian base has an annual production capacity of 3000 to 4000 excavators, and in the future, it is not ruled out that the supply to the North American market will be guaranteed based on the US tariff situation.

XCMG Machinery's overseas path has its own characteristics, with overseas revenue of 45.41 billion yuan in the first three quarters, a year-on-year increase of 20.8%. XCMG Machinery's complete set of "digging and shipping" solutions have entered the forefront of the world, and its Indonesian new energy factory has been put into operation in the Weidabei Industrial Park, becoming a landmark node in its localized manufacturing in Southeast Asia.

Zoomlion's overseas layout emphasizes regional balance, with the top six overseas regions accounting for 10% to 20% of the total. The six regions of South America, Europe, Africa, Southeast Asia, East Asia, and South Asia have all achieved double-digit growth. Zoomlion relies on more than 30 first tier business airports and over 550 sales and service outlets, with a service localization rate of over 60%.

In addition, the second phase of LiuGong's India factory has been put into operation, and the Indonesian factory is expected to be completed next year. Site selection research for manufacturing bases in the Americas and Europe is still underway.

Replacement of existing equipment to support the domestic market

The domestic market also showed a recovery trend in the first three quarters. According to data from the China Construction Machinery Industry Association, the cumulative sales of excavators from January to September were 214274 units, a year-on-year increase of 23.1%. Among them, the domestic sales were 104530 units, a year-on-year increase of 16.3%; The cumulative sales of loaders in China reached 58360 units, a year-on-year increase of 16.7%.

But the growth in domestic sales of excavators and loaders does not mean that the construction volume of real estate has rebounded. In the first three quarters of 2026, real estate development investment decreased by 20.6% year-on-year, and the monthly decline in September expanded to 27.19%; The newly started area of housing decreased by 24.9%, the completed area decreased by 25.1%, and the sales area of commercial housing decreased by 13.2%. Infrastructure investment decreased by 4.2% year-on-year, with road transportation industry investment decreasing by 9.9% and water management industry investment decreasing by 14.4%.

The industry generally judges that the driving force for this round of domestic sales growth mainly comes from the centralized replacement of existing equipment. In 2026, the country will implement the "two new" policy, and arrange 200 billion yuan of ultra long term special treasury bond as the guiding fund for equipment renewal, which will be used to eliminate and replace old equipment in industries, agricultural machinery, operating trucks, energy equipment and other fields, indirectly driving the demand for replacement of construction machinery.

According to the research report of Guojin Securities, the industry has entered a new round of centralized replacement period. From 2016 to 2020, the peak equipment will enter the elimination window. The "National IV" emission upgrade will accelerate the clearance of old equipment. The ultra long-term special treasury bond of 200 billion yuan will support large-scale equipment renewal action, driving the centralized release of replacement demand.

In the third quarter report, Sany Heavy Industry listed "continuous promotion of equipment updates" as the primary support for moderate repair of domestic demand, while the demand in the mining sector is relatively independent of the pace of infrastructure construction, with smoother operation than in building and road construction scenarios. The prosperity of large tonnage mining equipment is significantly better than that of traditional earthmoving machinery.

XCMG Machinery's attitude is more cautious. In the communication with investors in September, XCMG Machinery described the current domestic situation as a positive sign, believing that the demand for natural equipment renewal, investment space brought by uneven urbanization, and the landing of major projects together constitute the driving force for recovery, and judged that the domestic market is expected to continue to recover in 2026; At the same time, there were short-term fluctuations in non mining domestic demand in the third quarter, and the company, as the leader in all categories, was relatively more affected.

During the institutional investor exchange in the third quarter, Liu Gong proposed that the overall recovery trend in China remains unchanged, and the market showed weak stabilization characteristics in the third quarter; Driven by the stock update policy, earthmoving machinery performed better than non earthmoving machinery, and the replacement of electrified products was a prominent structural change in the third quarter. That is to say, the update cycle has provided a bottom line for the domestic market, but demand is first concentrated in earthmoving equipment, and there has not been a synchronous recovery across all categories.

The electrification process of loaders is faster than that of excavators

In the past few years, the electrification of construction machinery has remained at the conceptual and pilot level. But by 2026, the electrification of loaders has crossed a critical point.

From January to September 2026, the cumulative sales of electric loaders in China reached 33865 units, with an electrification penetration rate exceeding 58%. In September alone, electric products accounted for 58.6% of the domestic sales of loaders, entering the stage of large-scale substitution.

According to securities firms' calculations, XCMG Machinery holds about 30% of the market share in the electric loader market and maintains the industry's top sales volume; The revenue of new energy products in the first three quarters was 13.89 billion yuan, a year-on-year increase of 36.8%, with a growth rate higher than the overall revenue. XCMG Machinery's new energy loaders have formed multiple technological routes, including pure electric, oil electric hybrid, hydrogen fuel cell, methanol, etc., covering a full range of 0.5 to 35 tons.

Sany Heavy Industry will continue to launch multiple new energy products such as electric mixer trucks, dump trucks, loaders, excavators, and concrete pump trucks in 2026. The charging and swapping integrated equipment cluster has been implemented in high-altitude projects. In June 2026, Zoomlion showed its electric excavators, electric loaders, electric ore trucks and other products at the KOMATEK exhibition in Türkiye. Its ZE225GE pure electric excavator focuses on energy recovery and fast charging capacity.

The rapid electrification of loaders is not accidental. The electricity price advantage of domestic construction sites and mines is obvious, and the full life cycle cost of electric loaders has formed a substantial substitution attraction for fuel products. Loader is a relatively standardized category, and the technical threshold and scene adaptation difficulty for turning to electrification are also relatively low. The case study of the International Commission on Clean Transport (ICCT) shows that electric loaders can have a return on investment period as short as 8 months in some high-intensity closed scenarios with three shifts.

The electrification of excavators is a different story. From January to September, the cumulative sales of electric excavators in China were only 629 units, with an electrification penetration rate of about 0.6%; In September, the sales volume of domestic electric excavators was 218 units, with a penetration rate of 2.2%, still in the import period. Industry research generally believes that excavator operations are highly dependent on hydraulic systems; Even if the power source is replaced with an electric motor and the motor efficiency is increased to 90%, the overall energy efficiency of the whole machine is still only about 30% due to the efficiency constraints of the hydraulic system.

The pace of electrification in overseas markets is not synchronized with that in China. From January to September, the export penetration rate of electric loaders was about 5.5%, while the export penetration rate of electric excavators was less than 1%. In many overseas markets, the weak charging infrastructure and customers' higher requirements for equipment reliability and maintenance convenience have jointly raised the threshold for electric products to go global.

XCMG Machinery judged during its communication with investors that the rise in oil prices will effectively stimulate demand for electrified products. But the realization of this logic still requires the synchronous implementation of integrated energy storage and charging solutions and localized service capabilities.