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Zoomlion's Net Profit Increased 191 % in the Third Quarter and Its Net Cash Flow Reached an All-time High

2018-10-31

   Zoomlion released the third quarter report of 2018, showing that the company continued to maintain "quality growth" on October 30. During the period, the company realized the operating income of RMB 6.315 billion, increasing by 24.55 % year on year. The net profit attributable to the shareholders of listed company was RMB 439 million, increasing by 191 % from the same period last year. From January to September, the net cash flow generated by the company's business activities was RMB 3.05 billion, up 175 % from the same period last year, reaching the best level in history.

   Zoomlion believes that such achievements benefit from the sustained recovery of the construction machinery industry, and the company's operating efficiency and various financial indicators have improved year on year through a series of measures such as focusing on the main business, new business quality and optimizing production and marketing. At the same time, driven by the "the belt and road initiative" initiative and infrastructure projects, the construction machinery industry as a whole maintained a high level of operation, and the company's leading product share continued to occupy the forefront of the market.

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Growth achieved both in income and profit 

   It is understood that the growth of the construction machinery industry continues to exceed expectations by multiple factors such as domestic infrastructure investment, upgrading of production and manufacturing processes, and increase of overseas orders. From to the statistics, sales of major products of construction machinery increased by 32.4 % year on year from January to August 2018.

   According to the report of Zoomlion, the operating income and net profit achieved the growth by 24.55 % and 191 % respectively during the period, with the construction machinery sector showing a splendid performance and revenue increasing by 50% year on year. The main products continued to grow both in production and sales, with the volume and price rising, especially the market performance of tower cranes, concrete pump trucks, construction cranes and piling machinery. The construction hoisting products concrete machinery products, and construction hoisting machinery products increased by 109%, 44 % and 62 % on a yearly basis. Market share rose steadily. At the same time, the income of other key products of the company's construction machinery has also increased to varying degrees.

   In 2018, Zoomlion's resources continued to tilt to R&D, building a new driving force for intelligent manufacturing, accelerating its transformation to a "manufacturing service-oriented enterprise" and becoming an important engine for the company's benefit growth. The company emphasized innovation drive and maintained a high level of R&D investment, with R&D expenses increasing by 33.57% year on year. In the first half of this year, nine new 4.0 intelligent engineering machinery products were developed. Among them, ZTC 251 and ZTC C800 intelligent truck cranes with big data and single-machine intelligent technology came to the market. At the same time, the company has also developed a special 4.0 mixing station for high-speed rail and launched three models of products at one time, fully covering the market demand for high-speed rail, which is well received by the market.

   The recent release of three categories of high-altitude operation machinery and equipment by Zoomlion marks a major breakthrough in Zoomlion's extension of industrial chain and expansion of new business areas. At the same time, the layout of Zoomlion on the industrial Internet has also made significant progress. A few days ago, China Cloud Park, the Industrial Internet Platform established by Zoomlion settled in Shanghai's Lingang, continuously boosting industrial upgrading.

   In the field of agricultural machinery, the signing of a strategic cooperation agreement with Professor Wu Endor's artificial intelligence company Landing. AI marked the beginning of Zoomlion's entry into the field of artificial intelligence technology and became the first AI agricultural equipment manufacturing enterprise in China, providing new momentum for transformation and upgrading.

The operational efficiency was significantly improved

   In the report, Zoomlion's ending asset-liability ratio was 56.9%, and the leverage ratio and debt scale were stable and controllable. From January to September, the company promoted the receivables collection and second-hand equipment cleaning work, strengthened the regulations on the receivables and inventory, realizing the accounts receivable turnover days decreased by about 158 days, and the ending inventory reduced RMB 140 million to that of 2017. The inventory control capacity was significantly enhanced; the turnover days decreased 85 days. The ending operating capital increased by 8.45% on a yearly basis, much lower than the sales growth, showing the company's operating level and quality of business continue to improve.

   At the same time, from January to September, the total expenses of Zoomlion dropped by 8.2 % year on year. With the increase of the sales scale, the expense rate dropped significantly, and this played a positive role in the company’s net profit growth.

Net cash flow reached an all-time high

   From January to September, the net cash flow generated by Zoomlion's business activities was RMB 3.05 billion, up 175 % from the same period last year, reaching the best level in history. With the industry returning to the "fast track", sufficient cash reserves mean that Zoomlion will be able to master more initiative and have higher ability to research, develop products and explore the market in the fierce competition. The simultaneous rise in cash flow and profits indicates that Zoomlion's profitability and operating quality continue to improve.

   Zoomlion said that the company's cash flow has been effectively improved through a series of measures such as increasing sales revenue, strengthening collection of receipts and inventory management, and strictly controlling costs and expenses. The company will continue to tighten its credit policy, firmly grasp the key points of risk control and resolve the existing risks.

   Industry experts predict that the construction machinery industry will continue to grow driven by the growth of infrastructure investment, environmental upgrading, equipment upgrading, manual replacement and the further promotion of the " the belt and road initiative" initiative. Zoomlion will accelerate its integration into the wave of scientific and technological innovation in the future, transform equipment manufacturing with new technologies, compete with the world's first-class standards, and create a world leader in equipment manufacturing.


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