Despite posting a drop in last year's profit, engine supplier says it is on track to meet current sales goals Shandong-based truck engine supplier Weichai Power said first-quarter sales of 41,000 units were 2,000 more than in the same period last year and it was confident of reaching its target of 130,000 units this year. The company, which sold 115,000 engines in 2005, yesterday reported a drop in turnover for last year to 5.25 billion yuan, from 6.16 billion yuan. It said gross earnings fell to 1.15 billion yuan from 1.5 billion yuan in 2004. Net profit fell to 315.2 million yuan from 533.25 million yuan. 'We're confident we can attain this year's goal,' chairman Tan Xuguang said. 'The drops in turnover and gross profit are due to the decrease in production of heavy trucks in the second half of last year, with a total number of 20,000 units shelved. But we believe this year the supply of engines will keep growth steady.' Of the total units sold last year, 30,000 units were supplied to Weichai's parent, China National Heavy Duty Truck (CNHDT). Weichai last month announced it would split from CNHDT ahead of a Hong Kong listing planned by China National. The listing hopeful has stopped buying engines from Weichai and the loss of such a major customer sparked market fears of a big drop in sales. But Mr Tan has said CNHDT was just one of the biggest customers and its departure would not have a negative impact. CNHDT has turned to rival supplier Hangzhou Motor Engine Factory (Hangqi), a target for acquisition by Weichai since 2004. That deal was knocked back by CNHDT. 'Hangqi has stopped the acquisition work already,' Mr Tan said, adding that after a two-year delay the deal had become pointless. '[As] for the deposit of 80 million yuan given earlier to CNHDT for the acquisition, we're seeking legal means to solve the problem.' CNHDT is preparing for a red chip listing in Hong Kong. Its stake in Weichai has been transferred to an administrative unit of the Shangdong provincial government. After the transfer, the Shangdong government will become the single largest shareholder of the group with 23.53 per cent. Despite the fall in profit, Weichai decided to distribute a final dividend of 16.5 fen bringing the total payout to 33 fen, up from 30 fen the previous year. The group said it had a responsibility to its shareholders. 'The group has adequate cash for distributing dividends. We hope to keep ... distributing dividends to shareholders in terms of absolute value. About the dividend level this year, we're waiting to see the overall performance,' Mr Tan said. The group had 709.99 million yuan in cash as of last year and 1.77 billion yuan in 2004. Capital expenditure is expected to be between 400 million yuan and 500 million yuan this year with the addition of two production lines.