Business Review
On the evening of August 23rd，as the world’s leader in sophisticated manufacturing of semi-trailers and specialty vehicles, a pioneer in high-quality development of road transport equipment in China, and an explorer and innovator in new energy specialty vehicles in China, CIMC Vehicles (301039.SZ/01839.HK) announce its interim results for the first half of 2023. The Group has marked another pinnacle in its performance for the first half of 2023. Its net profit reached a historic high compared to the same period last year, achieving a milestone breakthrough.
According to the interim results announcement, CIMC Vehicles achieved revenue of RMB13,470 million, representing a year-on-year growth of 20.31% for the first half of 2023. The net profit attributable to the Company’s shareholders amounted to RMB1,897 million, marking a significant year-on-year increase of 418.52%. The net profit attributable to the Company’s shareholders after deducting non-recurring profit or loss reached RMB1,035 million, an impressive year-on-year surge of 197.05%. The gross profit margin increased to 19.34%. The Group’s total assets and total equity attributable to shareholders stood at RMB25,383 million and RMB14,271 million, respectively, representing an increase of 14.25% and 12.38% from the end of 2022. The net cash flow generated from operating activities surged significantly to RMB1,245 million. Earnings per share amounted to RMB0.94, and a total of 73,404 units/sets of vehicles of various types were sold worldwide.
Under the guidance of the intercontinental operation strategy, in the stage of starting the third venture, CIMC Vehicles’ six major businesses or groups achieved brilliant performance in the first half of 2023. The Light Tower Pioneer Business Group promoted the structural reform of the semi-trailer production organization in China, captured opportunities in emerging markets, and enhanced the profitability. The North American Business maintained a growth trend, thus achieving a year-on-year increase in both revenue and profitability. The European Business promoted the cost reduction and efficiency increase, and optimized the manufacturing process and supply chain management, thus achieving a year-on-year increase in both revenue and profitability. The Champion Tanker Business Group launched the “going global” strategy and enhanced the market share in segment markets despite unfavorable factors. The TB Business Group – Dump Truck Business made innovative efforts, explored transformation, and achieved a sustained increase in the market share. Meantime, the TB Business Group – Urban Distribution Van Truck Bodies Business gradually unleashed the production capacity and promoted the business development.?
Six Major Businesses or Groups are Thriving: Revenue from Overseas Market Surged by 38.66%
Under the new development paradigm featuring the domestic circulation and the international circulation, the commercial vehicle industry faced complicated situations of three overlapping phases including a slowing growth phase, a painful structural adjustment phase, and a phase of absorbing the adverse effects of previous stimulus policies. Riding on the trend of unified national market and high-quality development in China, CIMC Vehicles fully implemented the “2023 Light Tower Manufacturing Network” strategy and realized intensive growth by innovation. The six major businesses or groups developed steadily, with the domestic market consolidating its foundation and the overseas market continuously surpassing expectations. The Group’s revenue from overseas markets recorded a significant year-on-year increase of 38.66%.
Specifically, the Light Tower Pioneer Business Group seized the development opportunities of the unified national market, efficiently deployed the "Star-chained Manufacturing Network" and promoted the structural reform of semi-trailer production organizations in China. While consolidating the foundation of the domestic market, it captured the opportunities arising from strong demand in emerging markets. In the first half of 2023, the revenue from the Light Tower Pioneer Business Group reached RMB2,284 million, and the gross profit margin recorded a year-on-year increase of 3.23 percentage points. It maintained its leading market share in China’s semi-trailer arena.?
The North American Business, affected by the product price increases and ocean freight declines last year and by actively sharing channels and resources, took advantage of the global supply chain management. The North American Business recorded a revenue of RMB6,234 million with a year-on-year increase of 34.67%, higher than expected. The revenue from refrigerated trailers in North America increased by 25.58% year-on-year, and the revenue from van trailers in North America increased by 46.03% year-on-year, maintaining a leading position in the van trailer market in North America.
With respect to the European Business, due to the impact of high inflation and geopolitical conflicts in Europe, the European Business made breakthroughs against the trend. The European Business continued to optimize the manufacturing process and value stream, gave play to the centralized procurement platform, and improved the Light Tower Manufacturing Network, thus enhancing the production efficiency of local manufacturing and achieving high-quality growth. The revenue from the European Business increased by 28.12% to RMB1,630 million, and the gross profit margin increased by 1.81 percentage points. The profit of SDC hit a post-acquisition high.?
The Champion Tanker Business Group consolidated its fundamentals, explored opportunities from segment markets, and actively gained the vast incremental space in overseas markets. The Champion Tanker Business Group also carried out cooperation with major tractor manufacturers to develop integrated new energy products. The revenue of the Champion Tanker Business Group reached RMB2,459 million with a year-on-year increase of 14.77%. The market share of our cement mixers in China increased significantly to 42.09%, maintaining the leading position and hitting a record high.
The TB Business Group – Dump Truck Business, relying on the "Light Tower Manufacturing Network," built diversified products and leverages the advantages of LTP+LoM delivery. Meanwhile, it actively made arrangements for the new energy products to seize market share. The revenue of the TB Business Group – Dump Truck Business reached RMB312 million for the first half of 2023. The market share of our urban dump trucks in China increased to 12.33%.?
The TB Business Group – Urban Distribution Van Truck Bodies Business continued to unleash the production capacity, and promoted the business development with leading innovative technologies and product quality. Furthermore, the TB Business Group – Urban Distribution Van Truck Bodies Business strengthened the cooperation with new energy tractor manufacturers in China, and jointly built integrated new energy refrigerated vans. In the first half of 2023, the revenue of TB Business Group – Urban Distribution Van Truck Bodies Business increased by 56.33% to RMB204 million.
Accelerating Development in New Energy Field, Constructing Innovative Platform that Supports New Energy Tractors and Trailers.
Since the launch of the third venture, the Company has intensified the in-depth exploration of the new energy sector, actively promoting the development and innovation of new energy and intelligent products. The Group has developed an innovative platform that supports new energy tractors and trailers and provides integrated solutions for the transformation of traditional tractors and trailers.
In terms of semi-trailers, CIMC Vehicles has initiated the definition and preliminary research of the integration of new energy tractors and trailers to gain a first-mover advantage in the electrification of semi-trailers and drive industry transformation. It is worth mentioning that in the first half of the year, the North American Business successfully delivered to local customers new energy refrigerated trailers, becoming an industry benchmark of new energy refrigerated trailers.
Additionally, regarding the specialty vehicles, CIMC Vehicles launched pure electric mining trucks with long endurance mileage, and developed various new energy concrete mixer truck products with battery charging and swapping. For refrigerated van bodies, the Group actively cooperated with tractor manufacturers to develop new energy refrigerated truck products. In the first half of 2023, the Champion Tanker Business Group’s sales of new energy concrete mixer trucks achieved a remarkable increase; the market share of the TB Business Group – Dump Truck Business’s new energy urban dump trucks in China increased significantly to 32.50%.
Pooling Resources to Promote All Businesses, Starting the third Venture in High Spirit towards a Promising Future
Over the past 20 years, CIMC Vehicles has completed its first venture of "Breaking New Ground" and second venture of "Intercontinental Operation" through bold and innovative strategic philosophy and planning, precise deployment, and effective execution.
Looking ahead, in the face of a complex and challenging international environment and the arduous task of domestic reform, development, and stability, CIMC Vehicles will forge ahead, maintain strategic focus, start panoramic exploration, and concentrate resources to strengthen various businesses in the "National Unified Commercial Vehicle and Specialty Vehicle Markets". CIMC Vehicles will accelerate the establishment of a new development pattern, promote high-quality development, and start the third venture in high spirit towards a promising future.
The Light Tower Pioneer Business Group will promote the efficient deployment of the “Star-chained Manufacturing Network”, construct a new development pattern of semi-trailers in China, promote the structural reform of semi-trailer production organizations in China, integrate the resources of seven semi-trailer plants, achieving a leapfrog improvement in market share, sales and profits of domestic semi-trailer. It has become a benchmark for capacity-side reforms and typical development models as well as the sample of two-wheel drive. Meanwhile, the Group will vigorously develop business in emerging markets, and continue to achieve good business growth in emerging markets. The North American Business will continue to implement the “Deep Space Exploration Plan”. While consolidating the existing business, it will achieve high-quality integration and stable operation through the sharing of channels and sales resources. The European Business will improve the layout of LoM manufacturing plants, promote cost reduction and efficiency increase, and explore new products and businesses. The Champion Tanker Business Group will implement the “Light Tower Manufacturing Network” strategy, develop integrated new energy products and steadily promote overseas business. The TB Business Group – Dump Truck Business will develop differentiated competition, seize the opportunity from development of new energy and gain the market share by leveraging the advantages of LTP + LoM delivery. The TB Business Group – Urban Distribution Van Truck Bodies Business will continue to promote the construction of the “TB Light Tower Manufacturing Network”, and drive the "Star-light" program. It aims to enhance the operational efficiency of LTP Production Centers, actively expand business volume, and improve operational excellence.
Constant and regular doers often find themselves a success. In the stage of starting the business for the third venture, CIMC Vehicles will consolidate its resources to strengthen various businesses. The Group strives to achieve intensive growth through innovation by walking on an innovative path within the new energy commercial vehicle field, fueled by innovative technology and pioneering business models. CIMC Vehicles will steadily enhance operational quality across its six major businesses or groups. This pursuit not only propels the high-quality development of the road transport equipment industry but also contributes to China's modernization.