Weichai Power Recovery Engine sold 130,000 units in the first half

Weichai Power highlighted that engines remain the primary driver of its profitability, contributing roughly 70% to net profit. The company expects a recovery in engine gross profit margins during the second half of the year. In the first half of 2008, Weichai saw strong growth in heavy trucks and construction machinery, leading to engine sales reaching 216,600 units—of which 137,000 were heavy-duty engines, marking a 60.4% year-over-year increase. The company reported revenue of 20.978 billion yuan for the first half of 2008, reflecting a 36.75% year-on-year growth. Net profit reached 1.66 billion yuan, up 94.95% from the previous year, with earnings per share rising to 3.19 yuan—a 71% increase compared to the same period last year. This performance exceeded market expectations. Additionally, the net asset value per share stood at 14.87 yuan, the highest among listed companies in the first half of the year. The surge in demand for heavy trucks and construction equipment significantly boosted the sales of engines and transmissions, directly contributing to the company’s impressive net profit growth. Looking ahead, as raw material prices, particularly steel, are expected to decline, Weichai Power's gross margin is anticipated to recover. According to the mid-year report, the gross profit margin for engines, especially gearboxes and complete vehicles, was negatively impacted by rising steel prices in the first half of the year. Steel accounts for about 10% of the cost in complete vehicles and 12% in engines. A drop in steel prices during the second half of the year or early next year could lead to a noticeable improvement in the company’s profit margins. With the industry outlook improving and cost pressures easing, Weichai Power is well-positioned to maintain its competitive edge and deliver strong financial results moving forward.

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