2009 Interim Results
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HKSE: 2338 SZSE: 000338 2009 Interim Results August 2009 1 Disclaimer This document has been prepared by Weichai Power Company Limited (hereinafter as the “Company”) and has not undergone independent verification. This document doesn’t contain any express or implied representations or warranties, and also does not guarantee the accuracy, neutrality or completeness of information contained herein. Company and its affiliates, consultants or representatives don’t take any responsibility in terms of the loss caused by the information, which could be expressed in any forms in the document. Such forward-looking statements are subject to certain risks and uncertainties, most of which go beyond the Company’s control. 2 Achievements In A Challenging Economic Environment Operating indicators in market leading positions on product strengths; Key financial indicators continued to rebound on effective internal controls; Further enhancement in product mix and market positioning; Enrich value chain through innovative capital management and competitive strengths. 3 Agenda 1 2009 Interim Results Highlights 2 Business Review 3 Industry Review 4 2H 2009 Outlook 4 2009 Interim Results Highlights Key Financial Highlights (HKFRS) As at 30 June 2008 RMB Million (except EPS) 2009 Change(%) (restated) Turnover 15,646.7 20,789.7 -24.7 Gross Profit 3,014.5 3,996.1 -24.6 Operating Profit 1,790.9 2,633.0 -32.0 Net Profit (attributable to equity holders of the company) 1,222.0 1,659.2 -26.3 Basic Earnings Per Share (RMB) 1.47 1.99 -26.1 6 Key Financial Highlights (PRC GAAP) As at 30 June RMB Million (except EPS) 2009 2008 Change(%) Turnover 15,797.3 20,978.7 -24.7 Gross Profit 3,400.1 4,553.2 -25.3 Operating Profit 1,605.6 2,434.9 -34.1 Net Profit (attributable to parent company) 1,222.0 1,660.8 -26.4 Basic Earnings Per Share (RMB) 1.47 1.99 -26.1 7 Revenue Down On Economic Slowdown Under HKFRS Under PRC GAAP RMB Million RMB Million 25,000 25,000 20,789.7 20,978.7 20,000 20,000 15,646.7 15,797.3 15,000 15,000 10,000 10,000 5,000 5,000 0 0 2008 1H 2009 1H 2008 1H 2009 1H China’s growth eased on cyclical adjustment in home market and global financial crisis Sales in heavy-duty vehicles and construction machinery down sharply on keen competition and market transition Overall performance indicators continued to top peers; industry leading position consolidated on product strengths 8 Quarterly Profits Up On Sequential Basis Gross Profit (Under HKFRS) Net Profit (Under HKFRS) RMB Million RMB Million 3,000 1,000 950 900 861 2,323 800 2,231 2,188 711 700 2,000 600 1,415 500 1,212 400 357 361 1,000 731 300 200 100 -86 0 0 081Q 082Q 083Q 084Q 091Q 092Q -100 081Q 082Q 083Q 084Q 091Q 092Q Overall profitability down YoY on sharply lower sales and a higher base in the previous year Government stimulus measures promote fixed capital investment, creating conditions for growth in the heavy duty vehicle and construction machinery markets Overall profitability recovered most of the lost ground from previous quarters through effective internal controls 9 Other Financial Data HKFRS RMB Million 2009 1H 2008 1H Change (%) Total Assets 34,371.0 29,949.9 +14.8 Net Assets 9,259.2 7,997.8 +15.8 Assets – Liabilities Ratio (%) 63.1 62.2 +1.4 Liquidity Ratio (%) 117.7 113.4 +3.8 PRC GAAP 2008 1H RMB Million 2009 1H Change (%) (restated) Total Assets 34,275.1 29,267.7 +17.1 Net Assets 9,259.2 7,997.8 +15.8 Assets – Liabilities Ratio (%) 63.0 61.3 +2.8 Liquidity Ratio (%) 123.0 119.3 +3.1 10 Business Review Signs Of Recovery After Market Fluctuations Industry and market trends 300,000 200,000 100,000 0 081Q 082Q 083Q 084Q 091Q 092Q Heavy-duty Truck Industry Wheel Loaders with a Load Capacity of 5 Tonnes Fastgear Gearbox Weichai Engies Shaanxi Zhongqi 2008: volatile operating environment and new industry rules led to fluctuations in heavy-duty trucks and loaders markets; after reaching their heights in Q2, the markets began to come under pressure in the 2nd half before plunging to their lowest levels in Q4 2009: the government’s 4 trillion stimulus package led to strong growth in scraper and project car markets; the recovery was followed by rebounds in logistics transport vehicles and construction machinery markets later Sales of Weichai Power engine, Shaanxi Fast Auto Drive gearbox, and Shaanxi Auto heavy trucks met expectations; product strengths of engines and gearboxes further enhanced 12 Engines Business – Solid Market Leadership As at 30 June Unit 2009 1H 2008 1H Change (%) Heavy-duty Truck 101,569 137,075 -25.9% Construction Machinery 41,382 60,355 -31.4% Sales of heavy-duty truck engines down 25.9% YoY to 101,569 units, outperformed market average by 2.1 percentage points; market share of heavy-duty trucks (14 tonnes and above) reached 37.1%, up 0.6 percentage point YoY Sales of engines for construction machinery down 31.4% YoY to 41,382 units; wheel loaders (5 tonnes) continued to dominate the market with an 80.9% share 13 Engines Business – Stable Growth In Key Markets Sales of Coach Engine Sales of Diesel Generator Unit Unit 3,000 2,778 2,500 2,000 1,927 1,976 2,000 1,500 1,368 1,000 1,000 500 0 0 2008 1H 2009 1H 2008 1H 2009 1H Diverse product mix and market positioning: passenger cars, diesel generator units, yacht and other ancillary products Weichai Power’s coach engines are preferred by major coach makers such as Yutong, Jinlong for their fuel efficiency and overall quality; sales of coach engines up 39.6% YoY during the period Sales of diesel generators up 40.2% YoY 14 Engine Business – Value Chain and Product Mix Enhanced Launched WP5/7 motor products in year-end 2008 targeting the commercial vehicals and construction machinery markets; this line of products are in their second round of development and testing, and are being rolled out in small batches to test the market To consolidate its market leadership, Weichai acquired Moteurs Baudouin, a French maker of high-power 16-33L engines, at an attractive price in January 2009 Achieved optimum positioning in the 5L to 33L markets, furthering enhancing our competitive edge and market strength 15 Engine Business — Market Share Expanded Weichai Power provides common rail system and internal/external EGR National III engine products, which provide customers with a diverse range of system solutions. Developed the ―Landking‖ common-rail engine with energy-efficient, reliable, and environmental protection characteristics; sales in the first half of 2009 reached 60,000 units; sales to date since launch totaled more than 120,000 units, by far the best seller in the high-pressure common rail engine market Signed agreements with Bosch for long-term strategic cooperation 16 Engine Business- 12L High-Power Engines Lead Market Market trends of engines 60% 40% 20% 0% 2006 2007 2008 2009 240 260-270 280-290 300-340 Popularity of 260-270 horsepower engines waned over the years; 280-290 horsepower engines remained market leaders; 300-340 horsepower engines in steady rise to market dominant position 12L ―Landking―, the only mature platform for high power engines, is set to dominate the heavy-duty truck market over time 17 Engine Business – Technology For The Future ―Landking‖ National IV Engine is being rolled out in small batches to test the market and proved to be compatible with Foton vehicles. National IV is the first Weichai engine to have met the country’s emission standards, and it is compatible with Shaanxi Auto’s heavy-duty trucks The technology of National IV is comparable to international standards Sales of alternative energy engines were good, paving the way for future development 18 Gear Boxes Sales of Gear box(Fastgear) Sales of gear box down sharply on industry downturn, although leader position remained Unit solid in the heavy-duty vehicle market 12-16 speed gear boxes are leaders in the upgrades market Full range of gear box products in 7 speed, tiny 8 speed, mini 8 speed, 8 speed, 9 speed, 12 speed and 16 speed Products cover the full range of light-medium heavy-duty trucks, agricultural-use vehicles and passenger cars Shaanxi Fast is the world’s largest gearbox maker with annual production capacity of 600,000 units, and it has topped the industry on a number of performance indicators for seven consecutive years, and the largest gearbox maker in the world for three years in a row. Its products are sold worldwide 19 Axle & Heavy-duty Truck Engines Sales of Heavy-duty Truck Sales of Axle (Shaanxi Hande) (Shaanxi Zhongqi) Unit Unit 150,000 50,000 132,296 42,814 40,000 100,000 30,000 27,544 75,233 20,000 50,000 10,000 0 0 2008 1H 2009 1H 2008 1H 2009 1H Shaanxi Hande is China’s No.1 axle brand, with a strong focus on R&D. It is the first such company to export assembly technology to India Sales of heavy trucks by Shaanxi Zhongqi reached 27,544 units, with stable market share. Profits of Shaanxi Auto up sharply on lower raw material costs 20 Export Market – A Key Growth Driver Export Sales on Weichai and Major Industry Comparison Unit 2008 1H 40,000 2009 1H 30,000 20,000 10,000 0 Weichai Engines Shaanxi Zhongqi Heavy-duty Truck Wheel-loader Industry Industry China exported 20,994 units of heavy-duty trucks in1H 2009, down 46.5% yoy due to the global recession.