Innovation Drives “V” Reversal Weichai's 2016 Net Profit Growth Over 70%

2016 Weichai Performance Announced

In 2016, in the context of the new economic normal and supply-side structural reforms, Weichai Power strived to promote structural adjustment, transformation and upgrading, took the lead in achieving “V”-type reversal, entered a new round of growth, and achieved business throughout the year. Revenue was 93.184 billion yuan, a year-on-year increase of 25.64%; net profit attributable to shareholders of listed companies was 2.441 billion yuan, an increase of 72.86% year-on-year; basic earnings per share was 0.61 yuan, an increase of 74.29% year-on-year.

Chairman Tan Xuguang shared the Weichai Power's development performance with the investors at the performance announcement, and comprehensively summarized every step taken by Weichai Power since the IPO to strategic mergers and acquisitions and restructuring, and its strategic intentions. And earnings. Through the acquisition of Baudouin, restructured KION and Linde Hydraulics, and the acquisition of Dematic, it has achieved the upgrading of traditional businesses, the development of emerging strategic products and strategic markets, the vertical extension of the industrial chain, the basic structure adjustment, and the company’s business structure. Product structure and regional structure are more reasonable.

At the same time, Tan Xuguang also shared his views on future developments with investors. In 2017, sales in the heavy truck market in China are expected to increase by 9.2% year-on-year, mainly due to the accelerated landing of PPP projects, 4.7 trillion "major infrastructure" projects, tightening of policy supervision, accelerated replacement of heavy-duty trucks, and high-end trends in efficient logistics transportation. Investment in infrastructure and new projects will maintain tension, and the demand for replacement will stabilize. The construction machinery industry will continue to maintain its recovery trend. Consumer and smart manufacturing upgrades will continue to drive the rapid growth of the smart warehousing industry.

With the advantages of global collaborative R&D, advanced intelligent manufacturing technologies, differentiated products and services, and stable and loyal customer base, Weichai Power has advanced its layout and actively responded to it. It has basically completed the upgrading of engine and heavy-duty truck products, and will be used in high-power engines in the future. The heavy-duty transmission and heavy-duty vehicle market will continue to lead.

Tan Xuguang said that in the future, Weichai Power will achieve breakthroughs in its three strategic businesses. First, the traditional powertrain market will become a more market-leading leader, and the new energy powertrain will achieve rapid development. Second, the competitiveness of the whole vehicle will be further enhanced. Heavy-duty, medium-sized and light-weight trucks will lead the industry's latest development trend. Third, new breakthroughs in emerging businesses. Automated logistics and intelligent storage industry landed in the Asia-Pacific market, gave full play to KION's material handling solution capabilities, synergistic effect with Dematic's internal logistics overall solution, and strived to achieve a global breakthrough in strategic business.

Tan Xuguang stated that Weichai Power has achieved a magnificent transformation of strategic transformation and structural adjustment. In 2017, it is the first year of Weichai Power's global business integration, and it is also the first year to start a new round of rising cycle. Through the unremitting efforts of all management teams and cadres and staff, Weichai Power will strive to become a high-quality international company that is respected by all parties in society and continues to create returns for shareholders.

The fist product, seize the opportunity to grow up

Thanks to strong R&D capabilities and market pre-judgment capabilities, Weichai Power seized market opportunities and quickly adjusted its product mix. It mainly promoted large-displacement engines, high-speed standard-loaded logistics heavy trucks, and electric forklifts and warehouse forklifts. Obviously improved.

Weichai Power 12/13-liter engine sales increased by 112.9% year-on-year, accounting for 27.6% of total sales, leading the industry's large displacement development trend. The sales volume of the 12-16-speed transmissions increased by 41.0% year-on-year, accounting for 48.1% of the total sales, leading the industry to multi-position development. The sales volume of tractor/cargo trucks increased by 66.9% year-on-year, accounting for 69.7% of the total sales volume. The transformation from engineering experts to logistics specialists. Sales volume of electric/storage forklifts increased by 10.2% year-on-year, accounting for 83.0% of total sales, and the advantages of intelligent storage further highlighted.

Weichai's net profit growth exceeded 70% in 2016

Going to the High-end, Consolidating the Base and Reshaping the Benchmark

In 2016, Weichai Power upgraded its traditional business, focused on opening up new strategic products and strategic markets, extended the entire industry chain vertically, and established a new industry benchmark.

In terms of heavy trucks, the M3000 sold 36,000 units, an increase of 50% year-on-year, and launched a lightweight new M3000 6×4 model for policy adjustments. The X3000 sold 23,000 units, an increase of 3.8 times year-on-year. For the efficient logistics and transportation, build the X3000 Gold Edition, equipped with WP13 engine.

In terms of transmissions, the “Pilot demonstration for intelligent manufacturing of energy-saving heavy truck transmissions” project was selected as the list of smart manufacturing pilot demonstration projects for the Ministry of Industry and Information Technology in 2016. Wheel reducers, 12-speed aluminum alloy transmissions, passenger car transmissions and light truck transmissions have become new growth points.

On the engine side, the light-powered WP4.1 V-diesel engine sold 10,000 units, which accounted for 21% of the light-weight engine. The full range of agricultural equipment power breakthroughs have been made to meet non-road three-phase standards, with sales of 16,100 units, a three-fold increase from the same period of last year. The WP13 engine sold 15,500 units, an increase of 11.5 times year-on-year. Boduan Engine sold 730 units, an increase of 61% over the same period of last year, and received US EPA emission certification. The WP10H/9H engine was released, establishing the highest life-span standard for medium and heavy-duty engines in China and achieving batch matching.

Coded R&D, Innovation Drives Independent Rise

Weichai Power continued to increase investment in R&D, build a State Key Laboratory of Reliability of Internal Combustion Engines, and constantly conquered key technologies. Products gradually moved to the high end and quickly responded to changes in the market.

In terms of technology development, Weichai Power has successively completed the development and economic optimization of the 2-17L full series of national and municipal V engines; the integrated SCR assembly has a modular design to realize different types of box SCR assemblies with different emission standards The internal cavity distance is uniform. For the fuel injection system, Weichai Power's domestic fuel system is matched to the WP4.1/6/10 non-road three-phase engine, fuel injectors and common rails have been validated by the market; the key technologies and system integration for high pressure common rail fuel injection systems A major breakthrough was made. In terms of transmissions, the Fast S-series transmission is an important strategic product that fully complies with international standards and accelerates its entry into the international market. It has successfully supported the domestic high-end models of mainstream manufacturers and has been exported to the United States, the Netherlands, Austria, Belarus and other countries and regions. In terms of ECU sales and promotion, Weichai Power fully independently developed WISE ECUs for full application to the National IV, National V, and non-road three-phase sales of 80,000 units throughout the year.

Convergence and integration to create a smart manufacturing paradigm

Weichai Power promoted “Made in China 2025” to a high level, intelligentized the entire process to meet individual needs, created smart manufacturing Weichai model, and improved the company’s “low-cost, high-efficiency, high-quality” agile manufacturing capabilities. The country has a number of policy financial support.

Through global collaborative R&D, smart factory/intelligent production and post-market service platforms, product life cycle management is realized. In 2016, the company undertook several major projects, including the “Intelligent Plant Construction of High-end Diesel Engines Based on Intelligent Equipment and Industrial Data” of the Ministry of Industry and Information Technology, and the “Research and Development of Process Software and Knowledge Base for Intelligent Manufacturing of Heavy-duty High-Speed ​​Diesel Engines” of the Ministry of Science and Technology. "To build a national smart manufacturing benchmark.

In addition, through the acquisition of Dematic, the company has become a global leader in total solutions for internal logistics 4.0, offering a comprehensive portfolio of automated material handling solutions from forklifts to cutting-edge, fully automated material handling solutions, leading integrated software platforms And automation technology, to build a smart storage gold industry chain.

Internal and external cultivation, strategic layout of green power

Weichai Power accelerates the development of new energy powertrain technology and product support, and actively invests in new energy fields, and reserves technology and lays the foundation for future development.

In 2016, sales of new energy power system products reached 2,991 units, a five-fold increase year-on-year, and the entire series covered parallel systems, hybrid systems, pure electric systems, and incremental program systems. Currently, Weichai Power has the only new energy powertrain assembly engineering laboratory in Shandong Province, the National Engine Standardization Technical Committee Hybrid Power System Working Group, and is the industry standardization and innovation base for the new energy powertrain system for commercial vehicles and construction machinery in Shandong.

In respect of fuel cell technology, Weichai Power invested in the National High-tech Enterprise, which is a national high-tech enterprise integrating the design, development, and application of fuel cell technology, with securities code (834626). It aims at early deployment and proper intervention, and reserves fuel cell technologies. The new energy business layout lays the foundation for future technological development and product upgrades.

Linde Hydraulics gradually stepped into the take-off channel

Weichai Power has all along emphasized the landing of the “Europe Quality + China Cost” model. In 2016, Linde Hydraulics reported a significant improvement in its business and gradually entered a rapid development channel, gradually releasing its contribution to the company's profits.

In preparation for production capacity, Linde Hydraulic's second assembly line (motor) was put into operation, and six kinds of motors were produced on-line and passed German certification. Cleaning machines, grinding machines, honing machines, thermal deburring and other equipment have production conditions. Twelve varieties have been authorized by the German SOP.

In terms of product development, Linde hydraulic newly developed and applied 97 projects, including lifting, agricultural machinery, excavators, and concrete. The engine and hydraulic are coordinated to a high-drive electrically controlled hydrostatic bulldozer. WISE 40 hydraulic controllers are matched on bulldozers, loaders, agricultural machines, excavators, etc.

In addition, Linde's localized hydraulic products performed well. The pumps and motors sold a total of more than 6,000 units, an increase of 230% year-on-year, and sales revenue was 73 million yuan, an increase of 124% year-on-year.

KION + Dematic, open up smart storage industry chain

Weichai Power will use the advantages of “Kaiyu Material Handling Equipment and Services + Dematic Automation and Supply Chain Optimization Technology” to open up the intelligent storage industry chain and gradually transform from a technology-leading equipment manufacturing company to an overall solution service provider.

On November 1st, 2016, after the acquisition of Dematic, Weichai Power will gradually transform from a technology-leading equipment manufacturing company to a total solution service provider integrating hardware and software systems, and gradually build solutions, rely on services, and make software profitable. Business model. With the strong support of Weichai Power, KION and Dematic's Asia-Pacific strategy will gradually come to the ground and achieve both sales scale and profitability.

Kiao forklift trucks are the world’s second largest and Europe’s largest forklift truck production and warehouse technical service provider, with 45% of post-market operations. Dematic is the world's third largest provider of automated logistics system solutions in Europe and America. The combination of the two will provide a complete solution for the internal logistics 4.0 system.

International market, business development full bloom

In 2016, Weichai Power explored the international market through various forms, and the business expansion of international mergers and acquisitions, overseas joint ventures, local manufacturing, and trade exports became effective.

The overseas subsidiary KION Group achieved revenue of 5.59 billion Euros, an increase of 9.6% year-on-year; net profit of 250 million Euros, an increase of 11.3% year-on-year, and a net profit contribution to the company's home equity of 650 million RMB.

In terms of overseas joint ventures, Weichai Power and the Belarusian Maz Group will establish joint ventures to open up the CIS and European markets. In terms of international acquisitions, KION completed the acquisition of all Dematic shares on November 1, 2016; it fully leveraged its position and brand advantage in different markets, increased the influence of both brands, and produced cost synergies. Local manufacturing of Indian companies took root and realized mass production, providing greater development space and platform for occupying the Indian market. In terms of trade exports, the number of passenger cars in the Vietnam market was nearly 3,000, an increase of 135% year-on-year. The market share of 12L sleeper cars was 90%, and the market share of 5L coaches was 60%.

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