CIMC Vehicles’ 1H2024 Net Profit Reaches RMB563 Million "Star-chained Manufacturing Network" Achieves Remarkable Results Driving Significant Revenue Growth in Semi-Trailers in China
(23 August 2024, Hong Kong) CIMC Vehicles (Group) Co. Ltd. ("CIMC Vehicles" or the "Company", Stock code: 301039.SZ), a global leader in sophisticated manufacturing of semi-trailers and specialty vehicles, a pioneer in the high-quality development of China's road transport equipment, and an explorer and innovator in the new energy specialty vehicle sector in China, hosted its 2024 interim results conference. During the first half of 2024, CIMC Vehicles worked together and strove towards its goal to overcome industry challenges, and delivered performance that outpaced industry standards.
In the first half of 2024, despite a complex and challenging global economic environment, posing multifaceted challenges domestically and internationally, CIMC Vehicles achieved revenue of RMB10.7 billion, with a gross margin of 14.9%. The Company posted a net profit attributable to shareholders of the Company of RMB563 million, with the amount being RMB551 million when excluding non-recurring gains and losses. The global sales volume of various vehicles on the other hand amounted to 62,000 units.
At the same time, the proposed profit distribution plan is based on 1.874 billion shares of the Company. A cash dividend of RMB2.80 (tax inclusive) per ten shares will be distributed to all Shareholders.
Despite headwinds, CIMC Vehicles marked a quarter-on-quarter increase of 12.45% in net profit attributable to shareholders of the Company in the second quarter. The Company's profitability in the Chinese market recovered significantly, with both sales volume and gross profit margin improving. The "Star-chained Manufacturing Network" achieved remarkable results, where sales volume from the Star-Chained Semi-Trailer Business increased robustly by 24.67%. In addition, the sales volume of semi-trailers in China also increased, with the gross profit margin increasing significantly by 4.03 percentage points year-on-year. Under the guidance of the intercontinental operation strategy, our business resilience in overseas markets has been strengthened, with the EAPA investigation of North American container chassis trailers passing successfully, the European market holding on to its fundamentals, and the Australian market emerging as a breakthrough market with outstanding growth in profitability.
Stable Development across Businesses or Groups, the "Star-chained Manufacturing Network" Made Breakthroughs Against the Trend, China's Semi-trailers Increased Significantly
Despite the industry's downturn and deepening challenges, CIMC Vehicles achieved a steady development across its businesses or groups. The Star-Chained Semi-Trailer Business deepened the "Star-chained Manufacturing Network", capturing market share with a significant increase in both sales and revenue. The Champion Tanker Business Group launched the "Champion Rising Plan", driving structural reform in production, reshaping sales channels, and leveraging the advantages of the new energy industry chain, resulting in year-on-year growth in both revenue and gross margin. The North American Business pushed forward governance structure upgrades, enhancing intercontinental operations, controlling operational risks, and stabilizing the business. The European and other Business continued to optimize manufacturing processes, upgraded flexible production lines, and leveraged global supply chain management advantages, maintaining stable operations. The Truck Bodies for Specialty Vehicles Business efficiently implemented the "Midway Plan", focusing on cost reduction and efficiency enhancement, restructuring organizational development, upgrading products, and expanding into overseas markets, resulting in significant improvement in operating quality.
Specifically, under the "Star-chained Manufacturing Network", the Star-Chained Semi-Trailer Business completed organizational restructuring and market advantage integration, fully upgraded production lines, iterated modular products, and systematically advanced order center operations. By focusing on breakthrough sales of core vehicle models and freezing point markets, the Group achieved a 24.67% year-on-year increase in sales in the first half of 2024, with revenue up sharply to RMB 2.63 billion, marking the initial signs of improved profitability. Among the main models of the "Star-chained Manufacturing Network", sales volume of flatbed trailers and relevant derivative types in the Chinese market surged by over 50% year-on-year, with market share also expanding. CIMC Vehicles also maintained the first place in China's semi-trailer market, with a 14.12% market share.
The Champion Tanker Business Group, while solidifying its domestic business foundation, actively seized high-growth opportunities in overseas markets, aggressively expanded its new energy business, and pursued innovation in products, technology, and marketing strategy. The Group recorded revenue of RMB 2.51 billion in the first half of 2024, with a year-on-year gross margin increase, achieving strong profitability and maintaining a leading position in the tank trailer market. The "Midway Plan" of Linyu Vehicles, also yielded significant results, enabling the Company to turn losses into gains during the same period.
For the North America Business, CIMC Vehicles leveraged its global supply chain management strengths, combined local manufacturing with innovation-driven efforts, accelerated product modularization upgrades, optimized delivery cycles, and upgraded governance structures. The "Great White Bear Plan" was launched to explore new development patterns for the North American refrigerated semi-trailer global supply chain, deepening local operations. In the first half of 2024, the North American Business achieved revenue of RMB 3.68 billion, with gross margin stabilizing at normalized levels after a period of high performance.
In Europe and other Business, the Company actively expanded into other overseas markets, with its Australian business emerging as a breakthrough market. SDC in the UK maximized operational efficiency under global supply chain management to improve order fulfilment. Meanwhile, LAG in Belgium enhanced its integration with the Champion Tanker Business Group, actively promoted product R&D innovation, and improved production efficiency and logistics delivery capabilities. During the first half of 2024, the European and other Business recorded revenue of RMB1.51 billion. With these developments, SDC continued to hold the top market share in the UK, while LAG maintained its leadership position in the European tank trailer market.
For the Truck Bodies for Specialty Vehicles Business, CIMC Vehicles implemented the "Midway Plan", optimizing the LTP+LoM production system, advancing lean management, and practicing the "Royal Nanny" service concept and the "Excellent Horses with Excellent Saddles" strategy to capture market share. As a result, sales increased by over 50% year-on-year, with revenue up in the first half of 2024. The business achieved a significant recovery, with the market share of urban dump trucks in China rising to 16.7%.
Cultivate New Quality Productive Forces to Fundamentally Break Free from Low-quality Competition
As China's macroeconomic environment enters a new phase of normalization, the semi-trailer industry is undergoing a structural transformation. CIMC Vehicles is fully committed to its third venture, simultaneously breaking through challenges and driving self-recovery. Since the beginning of 2024, the "Star-chained Manufacturing Network" has entered a phase of high-efficiency execution, dismantling old structures to build new ones by leveraging innovative design and technology, structural reforms within the organization, and optimized resource allocation. By developing innovative productivity, CIMC Vehicles is fundamentally distancing itself from low-quality industry competition and is once again leading the semi-trailer industry into a new developmental landscape.
On the innovation and technology front, the Company has embraced digital technologies to enhance the infrastructure of the "Star-chained Manufacturing Network", accelerating the definition and promotion of modular products. Regarding organizational structural reform, CIMC Vehicles has accelerated the iteration of the Star-chained organizational model, fostering autonomous operation within Star-chained units. Agile operation centers, such as the Star-chained Semi-Trailer Annual Model Center, have been established, alongside an upgraded engineering team. The Company has also introduced a new organizational format, "Cell", in its factories, alongside the establishment of production training centers. In terms of optimizing resource allocation, CIMC Vehicles has developed new production capacities to meet the requirements of the Star-chained Manufacturing Network, strengthening internal coordination across its three LTP production centers to boost output and efficiency. The CIMC Light Tower Trailer Business Group and Tonghua Pioneer Trailer Business Group are dynamically adjusting their deployments to stimulate balanced regional growth by leveraging strong markets to uplift weaker ones. Additionally, the Company continues to expand the scope of the "Star-chained Manufacturing Network", launching a specialized breakthrough plan for freezing point markets and rapidly advancing the localization of the "Sanhao Development Center" and "Delivery Center."
In the second half of 2024, the Star-Chained Semi-Trailer Business will continue to focus on the "Star-chained Manufacturing Network", seizing opportunities for high-quality development in China's semi-trailer market to achieve substantial growth in market share, sales, and profitability. The Champion Tanker Business Group will actively drive product modularization, explore overseas markets, incubate innovative businesses, and strengthen the second growth curve. The North American Business will resume the operational delivery of container chassis, execute strategic planning, upgrade the North American refrigerated semi-trailer business, deepen localization efforts, and enhance business resilience. The European and other Businesses will leverage intercontinental operations and global supply chain advantages to refine the LoM manufacturing plant layout, improve production efficiency, and explore new businesses and products to embrace new development opportunities. The Truck Bodies for Specialty Vehicles Business will continue to maintain its leading position in niche markets, focus on cost reduction and efficiency improvement, leverage the LTP+LoM delivery advantage, expand market share, and enhance profitability.
Moreover, CIMC Vehicles is deepening its innovation and development of new energy products. The Company's new energy concrete mixer semi-trailer products with integrated tractor and trailer have completed customer trials, with plans for small-scale delivery in the next phase. CIMC Vehicles is also investing in and aligning with the industry in areas such as autonomous unmanned trucks and new energy-intelligent logistics transportation. The Company is actively advancing the development of autonomous driving, smart logistics transportation, and new energy-heavy truck technologies and businesses, positioning itself to capitalize on future industry growth opportunities.
Looking ahead, CIMC Vehicles will accelerate the pace of its third venture, stabilizing the principles of "Intercontinental Operations，Local Manufacturing". The Company will efficiently implement the "Star-chained Manufacturing Network" while continuously dismantling and rebuilding itself to optimize intercontinental operations and significantly enhance its efficiency.