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  • Dec 25, 2014
  • Updated: 6:24pm

Dongfeng to invest 30b yuan in growth

PUBLISHED : Thursday, 31 March, 2011, 12:00am
UPDATED : Thursday, 31 March, 2011, 12:00am

Dongfeng Motor Group, the largest Hong Kong-listed carmaker by market value, plans to invest 30 billion yuan (HK$35.58 billion) in the next two years to boost production and research and development capacity to meet booming demand in the world's largest car market.

Dongfeng plans to launch 14 new passenger-car models and three new series of trucks and buses by 2012 through its mainland joint ventures with Nissan Motor, PSA Peugeot Citroen and Honda Motors, the company said yesterday in an earnings release.

Net profit at Dongfeng rose 76 per cent last year to a record 10.98 billion yuan on rapid growth of sales of passenger cars and commercial trucks, the company said. The profit figure was about 3 per cent short of the 11.27 billion yuan forecast by analysts surveyed by Bloomberg. Turnover rose 33.3 per cent to 122.39 billion yuan, in line with expectations.

Shares in Dongfeng rose after the midday result announcement to close up 3.8 per cent at HK$12.52. That marked a rebound for the stock from Tuesday's seven-month low of HK$12.06, as investors shrugged off concerns over supply-chain disruptions at Dongfeng's Nissan plants due to the effects of the March 11 earthquake and tsunami in Japan.

A Nissan China spokeswoman said yesterday the Japanese firm would cut overtime and weekend production shifts across all its mainland plants to conserve inventories of imported parts from Japan, which at current levels were enough to maintain the adjusted output levels until mid-April.

State-owned Dongfeng sold 1.42 million passenger cars last year, up 34 per cent from 2009 and in line with the growth rate across the industry. Sales of commercial vehicles leapt 42 per cent to 530,000 trucks and buses, well ahead of segment-wide sales volume growth of 30 per cent.

Sales at the company's joint venture with Nissan, which includes both Nissan-branded cars and Dongfeng-brand trucks, accounted for 66 per cent of the company's total volumes.

Sales of Peugeot and Citroen-branded cars accounted for 19 per cent of total volume, while Honda sales accounted for 13 per cent. The remaining 2 per cent of sales came from vehicles produced and sold outside of Dongfeng's joint ventures. Passenger vehicles accounted for about 72 per cent of sales by both units and revenue.

Dongfeng's growth has been capacity-constrained in the past two years. The company's rated manufacturing capacity at the end of last year was 1.74 million vehicles per year, but it actually made 1.98 cars, trucks and buses. That gave Dongfeng a plant utilisation rate of about 114 per cent for the year, which would have been achieved mainly by adding overtime and weekend production shifts.

It now plans a dramatic boost in spending to drive expansion going forward, adding to the 7.07 billion yuan it spent last year. It will spend 14 billion yuan this year to boost rated production capacity 13 per cent to 1.97 million vehicles and plans to spend another 16 billion yuan next year.

Dongfeng announced a final dividend of 18 fen per share, doubled from nine fen per share a year ago.

Good mileage

Dongfeng achieved a plant utilisation rate of this much for the year: 114%

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