Weichai eyes export rise as earnings soar
Weichai Power, one of the mainland's leading diesel engine makers, will boost exports to maintain earnings growth after reporting an almost threefold surge in first-half profits.
'We aim to raise export sales to 20 per cent of total revenue in the next three to five years from about 5 per cent now,' chairman and chief executive Tan Xuguang said yesterday.
Weichai would expand its overseas sales and service network as it moves to establish an internationally known brand, Mr Tan added.
The Shandong company, which has exports to 97 countries, shipped out 123 per cent more engines or 7,098 units in the first half.
Weichai on Tuesday reported that net profit soared 191 per cent to 926 million yuan in the first half after the company merged with Torch Automobile Group in April.
Sales jumped 166 per cent to 9.31 billion yuan.
It sold a total of 140,100 engines during the period, a 68.7 per cent increase year on year. Mr Tan said the company plans to accelerate production of more 12-litre high-speed heavy-duty engines to 50 per cent of total output in three years.
He said the average price of a 12-litre engine was 20,000 yuan higher than a 10-litre model and its gross profit margin was 4 percentage points higher.
Weichai sold 6,469 12-litre engines in the first half and expects to sell 15,000 units for the whole year - up from 2,224 last year.
However, Mr Tan said the heavy-duty truck industry was facing uncertainty arising from the implementation of Euro III emission standards on the mainland.
Market watchers expect the regulations will come into force on January 1 next year, but so far the government remains undecided.
Citigroup analyst Charles Cheung said Weichai's second-half outlook was likely to remain strong as 'demand for heavy trucks and construction machines should remain robust' and that most of the company's clients were raising their full-year sales targets.
Shares of Weichai fell 6.6 per cent to HK$63.50 yesterday amid a decline in the broader Hong Kong market.
