Revenue Amounts to RMB224.1 Billion; Contracted Sales from International Business Soar 40%
HONG KONG — The world’s largest supplier of rail transit equipment with the most complete product lines and leading technologies, CRRC Corporation Limited (“CRRC” or the “Company”, HK.1766), today announced its annual results for the period ended 31 December 2016 (the “year under review”).
During the year under review, as the largest rail transportation equipment supplier worldwide, CRRC actively adapted to the ever-changing market environment and rose to market challenges. Through transformation, upgrades, reform and development, the Company made well-targeted efforts in market expansion, international operation, technical innovation and synergized development, etc., occupying a leading position in terms of the domestic market share in its main business areas such as locomotive, passenger carriage, freight wagon, EMU and intercity rail vehicle, etc. The Company’s core competitiveness has also been improved continuously. CRRC ranked 266th in the Top 500 companies as released by the Fortune Magazine in July 2016, ranked 54th among all Chinese companies.
In 2016, the revenue amounted to RMB224.138 billion, while profit before tax was RMB16.935 billion. Net profit attributable to owners of the Company amounted to RMB11.296 billion. As at the end of December 2016, the consolidated total assets of the Company increased by 8.54% to RMB338.311 billion and the total equity increased by 9.01% to RMB123.805 billion. The gearing ratio was 63.41%. In 2016, the Company’s newly signed orders amounted to approximately RMB262.6 billion (of which, contracted sales generated by the international businesses amounted to approximately USD8.1 billion, representing a year-on-year increase of 40%). Orders on hand as at the end of the reporting period amounted to approximately RMB188.1 billion. Basic earnings per share amounted to RMB41 cents. The Company proposes to distribute a cash dividend to all shareholders at RMB21 cents per share (tax inclusive).
Mr. Liu Hualong, Chairman of CRRC, said, “2016 was the first year of complete operation after the reorganization of CRRC. Facing Chinese economic downturn and more prominent structural imbalance between market supply and demand, we focused on the demand of users and endeavored to explore the market. The business-driven operating model was actively implemented and the lean management system was effectively operated, with the pace of reform and upgrade accelerated, and market synergy and integration effect strengthened. What?s more, we insisted on the strategy of ‘Innovation-driven Development’ and CRRC has become the role model for scientific innovation. CRRC also actively participated in the construction surrounding “One Belt One Road” and expanded into the international market. All efforts resulted in stable performance for 2016. While meeting the needs for the domestic railway and intercity rail transit, the Company continued to export all kinds of rail transportation equipment and our export products fully entered into developed countries, making the way to over 100 countries and regions across the globe. High speed train has become a highlight among the ‘venturing out’ high-end equipment in the country.”
The Company’s main businesses include railway equipment, rapid transit vehicles and urban infrastructure, new industry businesses as well as modern service, which accounted for 47.37%, 12.04%, 25.68% and 14.91% of the total revenue respectively. During the year under review, revenue from railway equipment business decreased by 18.04% y-o-y to RMB106.175 billion, mainly due to the decrease in purchase orders for major products in the railway market and a decrease in the number of deliveries. Revenue from rapid transit vehicles and urban infrastructure business increased by 10.22% to RMB26.978 billion as compared with 2015, mainly due to an increase in delivery of rapid transit and metro vehicles. Revenue from new industry businesses increased by 9.61% from 2015 to RMB57.562 billion, attributable to an increase in the number of deliveries of wind power equipment and new energy vehicles and automotive equipment. Revenue from the modern service business increased by 6.98% from 2015 to RMB33.424 billion, due to a growth in revenue from logistics as a result of increased efforts on centralized procurement.
In addition, the Company constantly accelerated its overseas business including setting up regional offices in North America and Latin America. The U.S. Boston Metro Project enjoyed steady progress, and the manufacturing base in Springfield operated smoothly. The Malaysian manufacturing centre of the Company has become a highlight of the ASEAN economic and trade cooperation and the strategic model base among all “One Belt and One Road” projects. The newly-constructed plant of the Company in India started operation, and the mergers and acquisitions of BOGE in Germany, and SMD in the United Kingdom have generated good results. The overseas R&D centers in developed countries such as Germany, the United Kingdom, and the United States proceeded smoothly, further improving the Company’s ability to deploy global innovation resources. The Company also generated excellent overseas business performance and received orders for diesel locomotives from Kenya, BTS subway from Thailand, subway from India, freight wagon from Pakistan, etc., consolidating the Company’s position in the traditional market. The Company won the bid for the Chicago Metro Project, subway orders from Melbourne, Australia and received EMU order from the Czech Republic, showcasing that it has become normal for its rail equipment products to enter into developed economies. The overseas market position has been consolidated.
In 2016, the Company continued to optimize the technological structure and the innovation capability has been upgraded significantly. The first national technological national innovation centre, i.e. the National High Speed Train Technological Innovation Centre was approved and started construction. The Company set up the Sino-American Rail Transport Research and Development Collaboration Centre and the CRRC?University of Michigan Advanced Manufacturing Research Centre. Eight special technological research and development centres including “CRRC Sensor Measurement Technological Research and Development Centre” were established. CRRC also implemented the R&D innovation project and undertook the “National Key Research and Development Plan – Key Advanced Rail Transportation Project”, which was the first project led by enterprises on behalf of the government. The standard EMU in China at a speed of 350km/hour completed operation assessment and obtained national model permits. China’s first medium-to-low-speed magnetic levitation express train was officially put into operation, and the Beijing maglev train was successfully delivered; the first levitated train and the first new energy levitated train successfully went off the production line. The research and development of products such as the overnight EMU at the speed of 350km/hour, the standard EMU at the speed of 250km/hour, the fast passenger and freight locomotives at the speed of 160km/hour and so forth progressed smoothly.
The optimization of technological structure has gained remarkable results. In the selection of the 18th China Patent Award, CRRC won 2 gold medals for its invention patents, ranking the first in the equipment manufacturing industry. CRRC was among the “2016 Top Global Enterprises with the Most R&D Investment”, ranking 96th worldwide. The Company’s products and projects also won “National Science and Technology Progress Outstanding Award”, “Second Prize in the National Technology Invention Award” and the Grand Prize in the 4th China Industry Awards.
Mr. Liu Hualong concluded, “2017 is a crucial year for CRRC’s implementation of the ‘New Five-Year Plan’ and for a comprehensive in-depth reform, as well as an important year for CRRC to start the new chapter of reform and development. CRRC will focus on three topics of ‘innovation, change, and internationalization’, focusing on refined management and aiming at reducing costs and enhancing efficiency, strengthening operation control, enhancing management level, speeding up its international operations, maintaining stable operating income and costs control to lay a sound foundation for building a world leading and multinational company with rail transportation equipment as the core, so as to reward shareholders and to benefit our employees with further development and more exceptional performances.”