Shenji Group Kunming Machine Tool's (HKG:0300) net profit attributable to equity shareholders for the year of 2011 is expected to decrease by over 50% as compared to the year of 2010, the company warned.

In 2011, the sales of conventional machine tool products were in the trend of rise, the company says. However, the demand of large and heavy machine tool products was decreased. The sales structure has been changed and the competition of the market has been fiercer. The competition of the market price was further intense. The cost of raw material, labor cost has been increased; and the manufacturing expenses, the cost of good sold and provision for bad debts during the period have been increased as compared to the same period of last year. Such matters led to the decrease of the comprehensive profit margin, and net cash flow from operating activities decreased accordingly, the company says.