Focus on comprehensive strength gives Weichai strong yearly results

Weichai Power reported robust business performance and steady growth in 2018, according to its annual results released on Tuesday.

The engine manufacturer continued to enrich its comprehensive strengths last year, with revenue increasing by 5.1 percent to 159.26 billion yuan ($23.72 billion).

Net cash flow gained from Weichai's daily business increased by 35.4 percent year-on-year to 22.26 billion yuan.

Thanks to the company's strategy to enhance the role of intellectual property in its operation, net profit increased by 27.2 percent year-on-year to 8.66 billion yuan, according to the company.

Weichai Power is a Fortune Global 500-listed company located in the Weifang Hi-tech Industrial Development Zone. Founded in 2002, Weichai Power has become one of the largest auto parts and power system conglomerates in China.

In 2018, the company focused on its main businesses and developed a diversified strategy with vehicles and engines as its flagship products with powertrains at the core, and integrated intelligent logistics as a new sector.

During the reporting period, the company's powertrain business continued to expand with a more balanced and healthier product structure, the company said.

In 2018, the total sales of engines reached 669,000 units, an increase of 8.5 percent year-on-year; the sales of gearboxes recorded 909,000 units, up 8.9 percent year-on-year; and the sales volume of axles was 650,000 units, up 6.8 percent year-on-year.

On March 11, 2004, the company was listed on the Hong Kong Stock Exchange - the first Chinese mainland company engaged in internal combustion engine manufacturing to do so. At that time, the annual revenue of the company was only around 6 billion yuan.

In August 2005, the company cultivated an all-round manufacturing line by restructuring the industrial chain of Xiang Torch, an auto company acquired by Weichai Power.

In 2017, via a new model for Chinese enterprises to return from H-share stock to A-share stock, Weichai Power was listed on the Shenzhen Stock Exchange.

In the same year, its revenue hit 10 billion yuan for the first time. Its annual turnover reached 29.26 billion yuan, an increase of 312.7 percent over the previous year, and its net profit reached 2.02 billion yuan, an increase of 172.5 percent over the previous year.

On March 11 this year, Weichai Power celebrated the 15th anniversary of its initial public offering. Leveraging global capital, it used the opportunity to develop itself from being a regional State-owned company to a global conglomerate.

The remarkable evolution of Weichai Power was realized by its "two-wheel drive" mode, which means as it developed competitive products for the market, the company also looked for opportunities through capital operation.

"Most manufacturing enterprises didn't realize the benefits of mergers and acquisitions. They only knew how to create value by product, rather than by capital operation. Weichai Power is at the forefront of the whole country in this regard," said Tan Xuguang, chairman and CEO of Weichai Power.

In 2009, Weichai Power acquired French marine engine developer and producer Moteurs Baudouin.

In 2012, Weichai Power bought a 25 percent stake in German forklift maker Kion Group and a 70 percent controlling stake in Kion's subsidiary, Linde Hydraulics. In the same year, Weichai purchased a majority stake in Italian yacht maker Ferretti Group, to tap into the luxury yacht sector.

Intelligent intralogistics service provider, Dematic, the newest brand of Kion, was also acquired by Weichai Power in 2016.

One year later, Weichai Power announced that its wholly-owned subsidiary, Weichai North America, had signed a share purchase agreement with Power Solutions International Inc, expanding Weichai Power's business reach in the North American market. Financial data show that after a series of mergers and acquisitions, Weichai Power has become an international enterprise, the company said.

In 2017, out of Weichai's revenue of 151.57 billion yuan, 65.37 billion yuan came from the overseas market, accounting for 43.13 percent of the total.

"Weichai's overseas mergers and acquisitions are not for the purpose of polishing its financial reports, but for filling in the shortcomings in core technology and realizing the strategic structural adjustment of the group," Tan said.

In 2018, it was awarded first prize at the 2018 National Science and Technology Progress Awards for its breakthroughs in commercial vehicle powertrain development and applications.

"Guided by the 2020-30 strategy, we will focus on the markets involved in the Belt and Road Initiative, deepen international brand building and optimize the business structure to accelerate the shift from conventional energy to new energy," Tan said.

"We will also speed up the development of core technology to further enhance our competitiveness. Leveraging our advantages in product mix, we will strive to expand the market share."