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The 2020 Zoomlion Annual Report released on March 30th shows the strong momentum of the construction machinery industry and recovery of the agricultural machinery industry. Always seeking high-quality development, Zoomlion reported a company revenue of 65.109 billion in 2020, up by 50.34% YoY and achieved a net profit of 7.281 billion yuan attributable to the parent in 2020, a YoY increase of 66.55%. Both figures reached a record high.
In Q1, 2021 Forecast that was also released with the Annual Report, the net profit attributable to the parent is expected to reach 2.2-2.6 billion, which is 114.41% to 153.39% higher compared with with last year, the best Q1 performance in company history.
Continuous Product Improvement Enables Zoomlion to Make Breakthroughs in Various Product Lines
As mentioned in the 2020 Annual Report, Zoomlion has made new records in sales and profitability as it continues to become more digitized and more heavily invested in R&D. Other key reasons include technology and product upgrades, business expansion and breakthroughs in new industries.
The substantial increase in revenue and net profit stems from the increase in the market share of Zoomlion's core products and the leading profitability in the industry. In 2020, Zoomlion's construction machinery business achieved a sales revenue of 61.383 billion yuan, a YoY increase of 49.75%. The growth rate of revenue in each segment was better than industry average.
In 2020, the market share of Zoomlion’s leading products, concrete machinery and cranes, have increased, and the growth rate was higher than industry average. In terms of concrete machinery, the market share of long-boom concrete pump trucks, truck-mounted pumps, and concrete mixer pumps still ranks first in the industry; in terms of the crane business, the sales of 30 tons and above truck cranes ranked first in the industry, and the market share of crawler cranes ranked first in China, the sales value of construction hoisting machinery hit a record high, with sales volume leading worldwide.
At the same time, Zoomlion made new breakthroughs in promising fields such as earthmoving equipment and aerial work platforms. Though Zoomlion is a later entry into this industry, its annual sales of earthmoving equipment now rank sixth among domestic brands. Aerial work machinery continues to perform well in the market. More than 40 "reliable, eco-friendly and intelligent" products have been launched, and its market share ranked first in the industry in 2020. In 2020, Zoomlion entered the field of dry-mix mortar, creating a blue ocean and new segment for Zoomlion New Materials.
Thanks to the favorable government policies and the now-recovered agricultural machinery market, the profitability of Zoomlion's agricultural machinery business has increased significantly, reaching 2.644 billion yuan in sales revenue, a YoY increase of 67.01%. Several "dominant" agricultural machinery products have emerged. Zoomlion's sugarcane machines, seedling throwers, and balers ranked first place in the market, and the domestic market share of wheat machines and dryers remains second in the industry. While intensively investing in agricultural machinery manufacturing, Zoomlion is accelerating its transformation into smart agricultural machinery and smart agriculture.
It is worth mentioning that in 2020, Zoomlion’s R&D investment increased by 120.67% YoY. The increased investment in independent innovation and R&D provides strong support for Zoomlion to build technology-based high-end products and further consolidate its leading position in the market.
Effective Cost and Expense Management and Continuous Optimization of Operation
All business indicators remained healthy and steadily improved in 2020. During the reporting period, Zoomlion's gross profit increased by 43.28% YoY to 18.616 billion yuan; in terms of net profit, Zoomlion achieved a net profit of 7.281 billion yuan attributable to the parent in 2020, a YoY increase of 66.55%. The growth rate of net profit was better than that of revenue.
Impacted by the COVID pandemic, customers were struggling to make payments on time in the first half of 2020. The net cash flow generated by Zoomlion’s operation reached 7.422 billion yuan, achieving a YoY growth of 19.33%.
Zoomlion strictly manages various costs and expenses even after the market recovered and revenue is increased. During the reporting period, Zoomlion's expenses including financial expenses, management expenses, sales expenses and R&D expenses decreased by 4.14% YoY. At the same time, corporate efficiency continued to improve, as the per capita output value of Zoomlion in 2020 increased by 21.5% YoY.
Zoomlion noted that due to effective cost management and improved company performance, Zoomlion's profitability in 2020 has greatly improved, generating more value for all shareholders.
To achieve higher quality development and to prevent and control operating risks, Zoomlion has conducted large scale depreciation calculation of receivable accounts and bad debt write-offs in 2020. Zoomlion carefully considered the impact of the COVID pandemic on customers with long account receivable age, and went through all receivables and fully evaluated the depreciation risks of receivables more than 3 years old, and wrote off bad debts that have been confirmed to be uncollectible. After depreciation calculation and bad debt write-off, the account receivable age and quality have been significantly optimized.
Optimistic Prediction for Q1, and Promising Forecast for the Rest of 2021
Increased investment, improved market concentration ratio, global economic recovery, and new environmental requirements put in place have given strong momentum to the machinery industry. Zoomlion is also optimistic about its upcoming profit for Q1, as stated in its Q1 revenue report released the same day: Net profit attributable to the parent in Q1, 2021 is expected to increase by 114.41% -153.39%, and the deduction of non-net profit is expected to increase by 137.88%- 189.59% over the same period of the previous year, setting the best Q1 profit in Zoomlion's history.
In 2021, Zoomlion will continue to use Internet thinking in its business operation and aim for best quality possible when creating products. While expanding its scale of business, increasing profit and operating cash flow, and maintaining sustainable growth, Zoomlion will uphold active business strategies, and implement sound financial plans. Zoomlion will speed up the pace of becoming a more automatic, digitized, intelligent and eco-friendly enterprise, and continue to explore the international market, continue its construction of the “smart industrial town”, and become an innovative and intelligent enterprise.