Yuchai Reports 24.6% Drop In Diesel Sales

China Yuchai International Ltd. (CYD) the Chinese commercial vehicle and engine manufacturer, as well as a distributor of engines through its main operating subsidiary, Guangxi Yuchai Machinery Co. Ltd. (GYMCL), announced its unaudited consolidated financial results for the year ending December 31, 2015.

• Total number of engines sold declined by 24.6% to 364,567 units compared with 483,825 units in 2014.
• Net revenue decreased by 16.4% to US$ 2.1 billion (RMB 13.7 billion) compared with RMB 16.4 billion in 2014.
• Gross profit decreased by 15.2% to US$ 429.7 million (RMB 2.8 billion) with a gross margin of  20.3%,  compared with RMB 3.3 billion and a gross margin of 20.0% in 2014.
• Operating profit decreased by 37.7% to US$ 124.0 million (RMB 805.2 million) compared with RMB 1.3 billion in 2014.
• Net revenue decreased by 16.4% to US$ 2.1 billion (RMB 13.7 billion) compared with RMB 16.4 billion in 2014.

CYD did note that research and development expenses increased by 2.5% to US$ 78.1 million (RMB 507.0 million) compared with RMB 494.6 million in 2014. As a percentage of net revenue, R&D spending was 3.7% compared with 3.0% in 2014.

Also, CYD said R&D expenses increased mainly due to the ongoing research and development of new and existing engine products as well as continued initiatives to improve engine quality. Although the market condition softened, the company said it maintained its efforts in R&D to prepare for the transition from Tier 2 to Tier 3 emission standards in the off-road segment and continued to introduce new engine models

The overall results reflect the ongoing overall softness in the Chinese equipment markets.  As reported by China Association of Automobile Manufacturers, sales of commercial vehicles (excluding gasoline-powered and electric-powered vehicles) decreased by 14.4% in China in 2015. The market remained weak in the heavy- and medium-duty truck segments, which registered a decline in sales of 26.0% and 21.0%, respectively. The market was also weak in the heavy- and medium-duty bus segments, which registered a decline in sales of 25.5% and 19.8%, respectively.

Weng Ming Hoh, president of China Yuchai, said, “2015 was a challenging year for the diesel engine industry in China due to the sluggish macroeconomic environment as well as emission standard transitions in both the on- and off-road segments. We managed to improve our average selling price and maintained our profitability despite the decline in unit sales in a weaker than usual market environment.

“While we wait for the economy to improve, we will continue to focus on costs control, expanding our product offerings, improving engine quality and strengthening our financial position,” said Hoh said

Yuchai said the financial information is reported using International Financial Reporting Standards as issued by the International Accounting Standards Board.