CIMC Harvests 85.8 Billion Yuan Revenue in 2019 - Maintaining a Consistent Record of Profitability

The year of 2019 has seen a number of headwinds, including slowing global growth and trade frictions, which have posed major challenges to the business of highly globalized CIMC. However, CIMC adheres to the development philosophy of “transformation and upgrading, quality growth”, and its increasingly mature diversified layout shows its advantages against various risks. Its multi-category businesses have taken advantage of the growth opportunities in China’s potential market and eventually achieved overall sound development, maintaining the profitability record in the 26 years since its listing. CIMC released its 2019 annual report on the evening of March 26, showing annual revenue of 85.815 billion yuan and a net profit attributable to the owners of the parent company of 1.542 billion yuan.

Most of the main businesses in CIMC’s business segments show a steady and aggressive trend. Among them, container production and sales continue to be the No. 1 of the industry; revenue from the road transport vehicle business has exceeded that of containers and become the largest profit contributor; the business revenue of energy, chemical and liquid food equipment reached a record high of 15.075 billion yuan; revenue from logistics service business reached 9.157 billion yuan; revenue from airport, fire control and automation logistics equipment business was nearly 6 billion yuan, a step closer to the scale of 10 billion. It is worth mentioning that in the context of the acceleration of the domestic industrial Internet, CIMC’s various businesses have accelerated the digital transformation and initially harvested results. This is in line with the current “new infrastructure” favorable policy and will usher in better development.

Container and vehicle businesses maintain leading position in the industry,Energy and chemical industry sector hits a new record high

In an uncertain 2019, the diversified layout of key equipment in the logistics and energy sectors plays to the advantage of fighting risks, allowing CIMC to demonstrate the development resilience of a 40-year large-scale enterprise. Under the principle of decentralized management and the strategic leadership of the Group's diversified coordination, each business segment also shows the professional advantages of focusing on its own field, and the business proportions are gradually balanced in the competition. Among them, the revenue of container, vehicle, energy and chemical, airport and logistics service accounted for about 24%, 27%, 18%, 7% and 11% respectively, all of which increased year on year except container.

In 2019, a sharp drop in overall industry demand led to a shrinkage of orders from CIMC’s container business. At the same time, the imbalance between supply and demand and the intensified competition in the industry led to a significant decline in the overall profit margin compared with the same period last year. However, despite the downward pressure of the market, CIMC container business unswervingly continued to implement innovation, upgrading and connotation optimization and maintained the world's largest container production and sales volume, with revenue of 20.163 billion yuan and a net profit of 137 million yuan. Although the year-on-year performance is not so significant, it is good that it has been able to stay profitable despite the release of profit warning reports by its peers. In terms of container prices, the business has shown signs of an increase in the first quarter of 2020.

The road transport vehicle business (with CIMC Vehicles as the main operating platform) has also been affected by the China-US trade frictions. The business continued to use the concept and strategy of “global operation, local wisdom” to seize the opportunities in each regional market in 2019, and realized overall revenue of 23.335 billion yuan, while the net profit increased by 2.36% year on year to 1.303 billion yuan. Hence the world's leading semi-trailer manufacturer continues to hold its position.

In the Chinese market, benefiting from the government’s efforts to promote “environmental protection” and “overload” treatment, the environment-friendly city dump truck compartment and lightweight durable cement mixer truck developed by CIMC Vehicles have entered a good period of development. Among which, the sales volume of lightweight durable cement mixer truck has been ranking No.1 in China for three consecutive years. Meanwhile, thanks to the rapid growth of domestic demand for frozen food transportation and professional cold chain distribution of fresh food, CIMC Vehicles has also realized the rapid growth of refrigerated semi-trailers and refrigerated vans. In North America, revenue from the refrigerated vehicle segment has hit a record high by strengthening local manufacturing and marketing. In the European market, after five years of strategic integration, the gross profit rate of LAG, a brand that focuses on the production and sales of tank semitrailers, rose to 13.4%.

CIMC’s energy, chemical and liquid food equipment business (with CIMC ENRIC as the main operating entity) hit a record high in 2019, with revenue of 15.075 billion yuan, up 6.44% year on year, and a net profit of 818 million yuan, up 3.33% year on year.

The continuous growth of CIMIC ENRIC is closely related to the country's steady promotion of natural gas production, supply, storage and sales system in 2019. As the only key equipment manufacturer and engineering service provider in China to achieve the full industrial chain coverage of natural gas, CIMC ENRIC actively cooperated with all parties in 2019 and continued to participate in various natural gas projects and equipment businesses such as the construction of peak-regulating reserve infrastructure in China. The Shenzhen gas reserve and peak-regulating warehouse project undertook by CIMC ENRIC realized the first LNG (liquefied natural gas) loading and unloading; the two tanks of Zhoushan LNG receiving station phase II have realized air lifting; construction of the world’s largest LNG bunkering ship has begun. In 2019, the clean energy division, which is mainly engaged in natural gas storage and transportation business, realized revenue of 6.815 billion yuan, with a year-on-year growth of more than 13.1%.

Logistics, airport and fire protection businesses continue to grow,A step closer to the 10 billion revenue plate

In 2019, under the background of adverse conditions such as the slowdown of the growth of the overall logistics market, CIMC’s logistics service business actively grasped the new opportunities in the industry and its revenue increased by 6.13% to reach 9.157 billion yuan. The goal of ten billion is coming true. The logistics service business was committed to becoming the leader of multi-modal transport with the characteristics of “equipment + service” in China; the container operating volume continued to maintain the No.1 in China, and the strategic cooperative storage yard project with CMA in Tianjin has been completed. In addition, CIMIC also realized “bulk grain into Sichuan” and the new import channel of “bulk cargo transportation into container transportation” through railway and waterway combined means, supported the largest cutter suction dredger in Asia, Tiankun, to make its first overseas voyage, and successfully delivered the world’s largest tonnage FPSO P70.

CIMC’s airport, fire protection and automatic logistics equipment businesses (with CIMC-TianDa as the main operating entity) have achieved excellent performance in 2019. The operating performance continued to show a quality growth, and various indicators reached a new high. The revenue reached 5.962 billion yuan, up 27.64% year on year, and the net profit was 253 million yuan, up 31.09% year on year, a step towards the scale of 10 billion yuan.

A major development in the strategic layout of fire protection is CIMIC’s most notable change in 2019. After CIMC-TianDa completed the 60% equity acquisition of Ziegler formerly owned by CIMC Group, the management structure and the shareholding structure were finally unified. Together with the acquisition of Shanghai Jindun and Shenyang Jietong, it has become the strongest and largest fire fighting truck group in China. The regional layout of fire trucks and the layout of middle and high-end categories have been further improved, laying a sound foundation for the next step towards the industry champion. In the 2019 Beijing International Fire Safety Expo, several fire fighting truck enterprises under CIMC-TianDa participated in the exhibition, which became the highlight of the exhibition. With its comprehensive strength, CIMC has been actively expanding into the government’s modular mobile fire station business in 2019, which is expected to develop into a sustainable business growth point in the future.

The airport equipment business of CIMC-TianDa continues to show the advantage of leading the global industry, contributing the largest performance for the sector. CIMC boarding bridge, the “world champion product”, has won more than 1 billion yuan of orders from well-known domestic and foreign airports in Shenzhen, Chengdu, Kunming, Frankfurt and Serbia, etc. Meanwhile, the world’s first unmanned intelligent boarding bridge developed by CIMC-TianDa was piloted in the Netherlands Airport, promoting the intelligent construction of global airports. Various kinds of high-quality airport equipment fully help Beijing Daxing International Airport to be officially put into operation. It has also made vigorous efforts to develop bridge-borne air conditioning equipment, and the number of orders has hit a new high to become the No.1 in China. It has also effectively helped various airports to “replace oil with electricity” to achieve energy conservation and emission reduction to promote the construction of “green airports”.

In addition, the automated logistics system business and intelligent parking business have also achieved remarkable market breakthroughs. It has won a 360 million yuan order for a luggage system from India’s state-owned airports, becoming the country’s largest airport luggage equipment integrator. It has also won the bid for the Shenzhen’s first stereo electric bus original and terminal stations project, which is a world first.

Due to the downturn in the oil and gas industry, the marine engineering business (with CIMC Raffles as the main operating entity) was in a state of loss. However, CIMC Raffles actively promoted business transformation and layout, extended related diversified businesses with oil and gas industry as the core, and explored the market opportunities of non-oil and gas business. It established a high-tech industrial structure that can smooth the industrial fluctuation cycle, and formed a business portfolio with oil and gas and non-oil and gas businesses each accounting for 50%. The number of new orders and orders in hand increased significantly, and the operating revenue of offshore engineering business reached 4.517 billion yuan, up 85.59% year on year.

In 2019, in order to implement unified arrangement and management of the existing offshore engineering assets, CIMC Group established the offshore engineering asset pool management platform company and put it into the financial and asset management business segment. It is mainly responsible for the operation and management of the offshore engineering assets platform of CIMC. Affected by the downturn in the offshore engineering market, the offshore engineering assets pool management platform company has conducted 5.03 billion yuan write-downs to offshore engineering platform assets. For this reason, the financial and asset management business was in the red in 2019. But one-off loss will not affect the normal operation of the financial and asset management business.

CIMC‘s annual report shows that the financial and asset management business achieved revenue of 2.213 billion yuan, up 5.76% year on year. The two key enterprises are developing steadily and providing more perfect financial services for the industrial development of CIMC. In 2019, CIMC has maintained a steady new business launch, continuously optimized its business portfolio, maintained overall safe and stable development, and realized about 5.457 billion yuan of new financial and leasing business launch. CIMC once again won the title of “China Financial and Leasing Company of the Year”. CIMC Finance Company gained approval to carry out cross-border capital centralized operation and management business. Meanwhile, it also operated two cross-border channels, namely, cross-border capital concentration under foreign supervision and cross-border two-way RMB capital pool under the guidance of the People's Bank of China, to realize all-currency cross-border capital collection and surplus and deficiency adjustment of the Group, sector and member enterprises. The total new financial investment of the year reached 15.45 billion yuan, up 10.75% year on year.

In 2019, C&C Trucks - the heavy truck business platform of CIMC, seized the opportunity of favorable national policy and recovery of market demand to actively promote the launch of new U + models while improving the channel quality, and comprehensively promoted nanny-style service, which greatly improved the brand influence and customer satisfaction. The annual orders exceeded 10,000 units, and its sales revenue reached 2.549 billion yuan, up 2.45% year on year.

CIMC’s industrial and urban business has made smooth progress in the disposal of major assets and the promotion of projects, and completed the reconditioning framework agreement for the Qianhai land parcel in Shenzhen. The Shenzhen Qianhai pre-launch zone project, Shenzhen Taiziwan project, Shanghai Meilan Lake project and Shenzhen Guangming LEO IoT industrial park project were all promoted in an orderly manner. It posted revenue of 1.436 billion yuan and net profit rose 42.91% to 806 million yuan.

CIMC’s smart manufacturing upgrade has shown results,The international layout was further expanded

In 2019, based on the development path of intelligent manufacturing, CIMC took "transformation and upgrading, quality growth" as the strategic theme, and focused on manufacturing model upgrading, product universalization, standardization and modularization to build three pilot projects of product full life cycle improvement. The demonstration projects, such as the “Longteng Plan” of container sector, the “Super Magellan Plan” of vehicle sector and the “Dream VI Plan” of ENRIC, were promoted in an orderly manner, and the overall intelligent manufacturing level of the sector was improved and phased results were achieved. CIMC is gradually increasing its investment in R&D, with a year-on-year growth of about 45% in 2019.

In terms of container business, the phase I production line of the new container factory project in Fenggang, Dongguan, was put into operation at the beginning of the year. With industry-leading technology, it has made active exploration in green, environmental protection, health and safety aspects, and built a new benchmark for the industry. At the same time, the container intelligent manufacturing upgrade project named “Longteng Plan” is in a tight and orderly progress, which will lay a solid foundation for the next leapfrog development of the container industry.

Moreover, the intelligent “lighthouse factories” established by CIMC Vehicles in Dongguan, Yangzhou, Zhumadian and other places have also achieved remarkable results. The “lighthouse factories” are centered on “producing semi-trailers in the same way as cars". The laser cutting, laser welding and automatic robot spraying equipment needed to build a semi-trailer are all interconnected, allowing 24-hour continuous production and greatly reducing the reliance on manual labor. Its highly automated production methods have shown efficiency advantages in restarting production after the fight against COVID-19 outbreak, providing the factories with great support in delivering to clients with good quality and on time.

According to CIMC’ annual report, CIMC accelerated the transformation and upgrading of intelligent manufacturing in 2019, and took “information construction integrating informatization and industrialization” as one of the Group’s strategies. It used the Internet of things, big data, artificial intelligence and other new technologies to actively explore the integration of informatization and industrialization. In 2018, the Qingdao refrigeration industrial base for the container sector and the Wuhu Ruijiang vehicle factory for the vehicle sector were successfully piloted. After that, the platform capability built from the two successful pilots was quickly replicated to the 10 enterprises under the Group, and new capabilities such as “employee safety”, “key process of waterborne paint”, “robot management” and “predictive maintenance” were also built. This has found a green, environment-friendly and safe way for the Group’s manufacturing-type enterprises to reduce material cost and improve production efficiency. By the end of 2019, nine enterprises had obtained the implementation standard certification of the national integrated management system of informatization and industrialization. The following new industrialization will be carried out in an all-round way through comprehensive deployment and pilot promotion to gradually realize the transformation and upgrading of the manufacturing sector.

In 2019, a number of CIMC business segments carried out cross-border M&A cooperation and domestic M&A layout. Among them, CIMC ENRIC acquired the German service company to operate two storage yards in Germany. The new storage yards will work with the existing Burg Service B.V. service outlets in the Netherlands to build a “Sino-European interactive” service network and further consolidate the global layout. With the acquisition of high quality assets of Canada’s DME, CIMC has started to develop its craft beer business in Asia and achieved the full value chain coverage from small brewers to large international/multinational breweries.

New business continues to make new breakthroughs and is expected to become a new growth point

As an innovative business of CIMC, CIMC Modular has formed a one-stop service mode of “manufacturing + service + finance” combining industry and finance, and made a number of new business breakthroughs in 2019. It has established strategical cooperation with well-known technology groups and successfully completed several cloud data center projects. It has also signed projects in the two new areas of schools and visitor centers. As the modular building technology is highly valued by the Hong Kong SAR Government, CIMC Modular has undertaken the construction of Hong Kong's first permanent high-rise high-end talent apartment project. In addition, the Xiong’an Civic Service Center project it participated in was awarded the Luban Prize; and the Technical Specification for the Box Steel Structure Integrated Modules Construction edited by it was approved to be published, filling the gap of the industry standard.

In foreign markets, CIMC Modular has achieved good results in the United Kingdom, Australia, New Zealand, the United States, northern Europe and other markets. In the UK, a branded hotel built by CIMC Modular for a world-renowned group has been delivered and put into operation, and CIMC has also signed a project contract with its hotel chain brand; CIMC participated in the UK’s largest construction trade show and won the “Best Marketing Award for Exhibitor”. In Australia, the first high-rise factory-prefabricated hotel project with full curtain wall has officially opened. In New Zealand, two more phases of the same type project were delivered this year, following the successful delivery of the first government public safety services project. In the United States, it has signed strategic cooperation agreement with a well-known real estate development company to jointly develop the American market. In northern Europe, the first modular hotel project in Iceland was successfully delivered and the first batch of orders was signed in Norway.

In 2019, CIMC Intermodal Development Co., Ltd. continued to surge forward in accordance with the strategic thinking of “deploying equipment, building channels, entering stations and establishing platforms”, and has made important progress in various measures. Its road and rail intermodal network has already covered 11 railway bureaus, more than 40,000 TEU containers were shipped, more than 200,000 tons of bulk goods were delivered, and the number of road deliveries exceeded 10,000. The company has obtained the Domestic Ship Management Business Operation License and has been awarded as the key logistics enterprise in Shenzhen.

There are a number of innovative businesses within CIMC that are growing rapidly, some of which have started to make positive contributions to the Group in terms of revenues and profits. The future prospects are promising.

Looking ahead to 2020, CIMC will stick to the strategic positioning of “manufacturing + service + finance”, continue to promote business transformation and upgrading, and be customer-oriented to achieve the extension from manufacturing to service. It will continue to improve its global operational capacity, optimize its business and assets, accelerate industrial agglomeration, and foster industrial chain advantages. In terms of technology upgrading, business mode and management mechanism, it will continue to innovate and control risks and strive to grasp market changes in order to lay out new industries and innovative businesses and achieve sustained and quality growth.