CIMC Vehicles’ Interim Report 2022: Revenue Amounted to RMB11.2 billion with Significant Increase in Overseas Markets of 59.2%
(25 August 2022, Hong Kong) – CIMC Vehicles (Group) Co., Ltd. (“CIMC Vehicles” or the “Group”, Stock code: 301039.SZ/01839.HK), the world’s leading high-end semi-trailers and specialty vehicles manufacturer, today announced the interim results 2022.
According to the Group’s Interim Report, CIMC Vehicles recorded a revenue of approximately RMB11.2 billion and the net profit attributable to shareholders of the parent company of RMB365.8 million. Total assets and net assets attributable to shareholders of the listed company amounted to RMB22.4 billion and RMB11.7 billion, respectively, an increase of 2.7% and 0.2% compared to the end of 2021. The overseas market grew remarkably. The revenue from overseas markets registered a significant year-on-year increase of 59.2%. The revenue from the North American market and the European market increased 115.2% and 6.4%, respectively. Gross profit margin of global semi-trailers achieved a year-on-year increase of 0.5 percentage points. Capitalizing on the advantage of intercontinental operation, the Group has further strengthened its leading position.
With regard to the six major businesses or groups, in the first half of 2022, Light Tower Pioneer Business maintained steady profitability; North American Business actively seized the growth opportunities from the intercontinental operation, with a significant increase in the revenue and profit; European Business made strategic breakthroughs, with quality growth; Champion Tanker Business Group maintained the leading market share of its main products despite the influence of many unfavorable factors; Urban Dump Truck Business continuously developed and launched new energy products; the sophisticated manufacturing production base of TB Business Group was basically completed, thus gradually releasing the production capacity.
Outstanding Performance Resilience and Enhanced Operation Quality
In the first half of 2022, with the flare-ups of the global pandemic and the more complicated domestic and international economic situation, the coexistence of uncertainty and urgency became a new normal. Amid a generally weak commercial vehicle market in China, CIMC Vehicles actively implemented various strategic measures, integrated the advantageous resources, promoted the arrangements for six major businesses or groups, and adopted a series of measures to increase revenue and control costs. During the Reporting Period, the gross profit margin increased by 1.1 percentage points to 11.2%.
Moreover, the strong performance of the Company’s overseas business made up for the stagnant growth of the specialty vehicles business in China to a certain extent. In the first half of 2022, the Company's operating cash flow improved significantly compared with the second half of 2021, fully demonstrating the Company's business resilience.
With Proven "Intercontinental Operation" Strategy, the Group’s Overseas Business Perform Remarkably
In specific, due to policies and markets, China’s logistics and transportation industries were integrated more rapidly, and China’s semi-trailer industry was subject to upgrading and iteration, as well as further transition to scale manufacturing. Based on the “Light Tower Manufacturing Network” strategy of the Company, Light Tower Pioneer Business accelerated digital upgrading, and through production line optimization and regional planning, gave full play to the effectiveness of the “Light Tower” Plants, thus making a breakthrough in sales. In the first half of 2022, the revenue of Light Tower Pioneer Business of the Company reached approximately RMB2,327.1 million. The “Vanguard Trailer Rental” company of Light Tower Pioneer Business successfully completed the A round of financing.
Regarding North American Business, logistics, transportation and semi-trailer markets in North America emerged from the pandemic and began to fully recover, thus the North American semi-trailer market was in short supply. Capitalizing on the advantage of intercontinental operation, CIMC Vehicles actively implemented the strategic measures of North American Business, controlled the global logistics and distribution costs through centralized purchase and digital management of the global supply chain, and optimized the arrangements for local production and manufacturing, and overcame the impact of the "big traffic jam" in the global supply chain, and made profits hit a new record high. In the first half of 2022, the Company’s North American Business performed brilliantly, with an increase in the sales and prices of its three main products, which led to the revenue increasing by 151.6% to approximately RMB4,628.9 million and the gross profit margin increasing by 4.0 percentage points year-on-year, and significant improvement in the profitability.
It is worth noting the market demand for the refrigerated trailer market in North America, which is one of the three major products that continued to grow. CIMC Vehicles actively seized the opportunity from the growth of the market and released the refrigerated trailer production capacity in North America. Capitalizing on the established Sophisticated Manufacturing System Network, North American Business has formed a flexible, reliable, low-cost and close-distance product delivery network, and actively met the product delivery needs of North American customers. In the first half of 2022, the revenue of refrigerated trailers of the Company in North America increased significantly by 189.4% year-on-year, and the gross profit margin increased by 3.0 percentage points year-on-year.
As for European Business, under the guidance of the intercontinental operation strategy, SDC actively improved the production line of the localized “Light Tower” Plant, completed the production line upgrade and construction of the UK South Hampton pioneer manufacturing plant and the UK Mansfield manufacturing plant, expanded the modular design and standardized production of products, basically completed the construction of a sophisticated manufacturing system, and greatly improved production efficiency and production capacity. In the first half of 2022, CIMC Vehicles' European business strategy paid off initially, with revenue increasing by 14.1% to RMB1,272.0 million, achieving quality growth.
For Champion Tanker Business Group, the end demand in the heavy truck market was continuously sluggish due to factors including the slowdown in infrastructure and real estate investment in China, emission standard transition, the early release of market demand, and the intensification of homogeneous competitions in the industry. Despite the market downturn, Champion Tanker Business Group turned challenges into opportunities, continuously improved the “Light Tower Manufacturing Network”, brought into play the synergistic advantages of the three major production bases, and was continuously and deeply engaged in the market segments. With the extension of the industrial chain and the integration of upstream and downstream resource advantages, in the first half of 2022, the revenue of the Company’s Champion Tanker Business Group reached approximately RMB2,142.2 million and the gross profit margin increased by 0.8 percentage points year-on-year.
With regard to Urban Dump Truck Business, CIMC Vehicles actively carried out product optimization and transformation, deepened the joint development with tractor manufacturers, and continuously made efforts in terms of new energy heavy trucks. In the first half of 2022, the revenue of the Company’s Urban Dump Truck Business reached approximately RMB478.5 million.
As for TB Business Group, through the introduction of North American refrigerated truck body technology and European dry truck body technology, TB Business Group continuously carried out assimilation, innovated, improved and built a Light Tower production line for refrigerated truck bodies at an international advanced level and a highly automated Light Tower production line for dry truck bodies, thus promoting the construction of the “Light Tower Manufacturing Network” system. In the first half of 2022, the revenue of the Company’s TB Business Group reached approximately RMB130.5 million.
Promoting Research and Development of New Energy Products to Support the “Carbon Peaking and Carbon Neutrality” Strategy
With the promotion of the “carbon peaking and carbon neutrality” strategy and the national new energy policy, the penetration rate of new energy commercial vehicles continued to increase. CIMC Vehicles actively promoted the R&D and innovation of new energy products, promoted the high-quality development of the road transportation equipment industry, and contributed to the achievement of the national " carbon peaking and carbon neutrality” strategic goal.
With regard to the innovation of new energy product, CIMC Vehicles actively developed lightweight new energy urban dump trucks, which are equipped with ultra-high strength wear-resistant steel to ensure the realization of lightweight technology, and match the new energy chassis, which has leading advantages in lightweight, durability, corrosion resistance and load capacity; Meanwhile, CIMC Vehicles launched pure electric ore trucks, products using advanced "ERS" technology, to achieve "rolling down the slope with heavy loading" energy recovery, energy saving rate of more than 85%, with wire-controlled chassis, to achieve long endurance; In terms of concrete mixer trucks, guided by market demand, CIMC Vehicles has developed various new energy pure electric concrete mixer truck products, including charging and power exchange, to provide rotating power for mixing tanks with small capacity batteries, save energy and reduce emissions, and reduce costs; In terms of urban distribution vehicles and refrigerated van vehicles, CIMC Vehicles has actively developed new energy refrigerated vehicles in conjunction with the tractor manufacturers to reduce the weight of truck bodies by more than 1,000 KG.
Meanwhile, the Company developed innovative business models in new energy and automatic driving scenarios and built lightweight and enduring semi-trailer solutions around the development trend of rapid development of new energy heavy trucks, regional automatic driving and special-line formation driving, so as to transform customer's purchase of products from price to value orientation and establish close relationship with customers. As such, CIMC Vehicles forms an innovative exploration direction integrating technology, business and investment, and seizes the development opportunities in the new energy commercial vehicles market.
Deepen Strategic Arrangements for the Six Major Businesses or Groups to Promote High-quality Development
Looking forward to the second half of 2022, China’s economy is in a “new normal.” China’s economy shifts from a high-speed growth stage to a high-quality development stage. The economic structure shifts from “focus on output and capacity enhancement” to “adjustment of the inventory and optimization of the increment”, and the driving force of economic development changes from “relying on resources and low-cost labor” to “innovation-driven.” The sustained implementation of growth stabilization policies, the accelerated implementation of infrastructure projects and the orderly recovery of supply chain and logistics transportation will support the steady recovery of China’s economy; the profits of downstream enterprises in the manufacturing industry are expected to improve due to various positive factors.
In the face of new opportunities and challenges, the management of CIMC Vehicles will actively implement various strategic measures, integrate the superior resources of the Company, and actively make arrangements for local manufacturing while persisting in optimizing the efficiency of intercontinental operation, and improve the product assembly, delivery, after-sales service and financial service capabilities in regions and countries where the markets are located, deepen and expand the influence of local brands, and determine to ensure the deep engagement of the Company in local markets for a long time. Meanwhile, the Company is expanding the profitability in the value chain and increasing the opportunities to make a profit in the whole life cycle, so as to ensure the steady development of its six major businesses or groups.
In the future, CIMC Vehicles will continuously build the Sophisticated Manufacturing System, actively deepen its strategic arrangements for the six major businesses or groups, and further increase its market segment share in China through production and marketing coordination, so that overseas semi-trailers will have competitive advantages in North American, European and emerging markets, and thus further enhancing its leading position in the world.
Moreover, CIMC Vehicles will consolidate its main business according to the core measures and resources of the six major businesses or groups, accelerate the reform that is conducive to improving the efficiency of resource allocation, actively implement standardization strategies and improve the “development achievement” evaluation system through high-quality products and services, strong innovation, high demand identification rate, brand influence, networked and intelligent production organization methods and a complete industrial system, so as to explore and identify a “high-quality development path.”