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

Weichai Power highlighted that its engine business remains the primary driver of profitability, contributing approximately 70% to the company’s net profit. The company anticipates a recovery in the gross profit margin for engines in the second half of the year. In the first half of 2008, Weichai saw strong growth in the heavy truck and construction machinery sectors, which boosted engine sales to 216,600 units—among which 137,000 were heavy-duty engines, representing a year-on-year increase of 60.4%. The company reported impressive financial results for the first half of 2008, with total sales revenue reaching 20.978 billion yuan, up 36.75% compared to the same period last year. Net profit surged to 1.66 billion yuan, reflecting a 94.95% year-on-year increase. Earnings per share reached 3.19 yuan, rising by 71%, exceeding market expectations. The book value per share stood at 14.87 yuan, making it the highest among listed companies in the first half of the year. The strong demand in the heavy truck and construction equipment markets significantly boosted the sales of engines and transmissions, which were key factors behind the substantial rise in net profit. Additionally, as raw material prices—especially steel—are expected to decline, the company's gross margin is anticipated to improve. According to Weichai’s mid-year report, the gross profit margin for engines, particularly 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 of complete vehicles and 12% of engines. A drop in steel prices during the second half of 2008 or into 2009 could lead to a meaningful recovery in the company’s profit margins. With the industry outlook improving and cost pressures easing, Weichai Power is well-positioned to maintain its strong performance in the coming quarters. Investors are closely watching how the company manages its margins and capitalizes on continued demand from the construction and transportation sectors.

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