CIMC generates €11B in revenue for 2019

China International Marine Containers (CIMC) Group has maintained a consistent record of profitability with its latest financial results despite a number of headwinds.

The 2019 calendar year, according to CIMC, demonstrated a slowing of global growth and trade frictions which posed major challenges to the globalised business.

CIMC has adhered to its development philosophy of 'transformation and upgrading, quality growth', and its increasingly mature and diversified layout shows its advantages against various risks. Its multi-category businesses have taken advantage of the growth opportunities in China’s potential markets and eventually achieved overall sound development, maintaining the profitability record in the 26 years since its listing.

CIMC released its 2019 annual report on the evening of 26 March, showing annual revenue of 85.815 billion yuan (approx. €11 billion)  and a net profit attributable to the owners of the parent company of 1.542 billion yuan (approx. €1.4 billion).

Most of the main businesses in CIMC’s business segments are reported to show a steady, aggressive trend. Among them, container production and sales continue to be the number one of the industry; revenue from the road transport vehicle business has exceeded that of containers and become the largest profit contributor; the business revenue of energy, chemical and liquid food equipment reached a record high of 15.075 billion yuan (approx. €1.9 billion); revenue from logistics service business reached 9.157 billion yuan (approx. €1.2 billion); revenue from airport, fire control and automation logistics equipment business was nearly 6.0 billion yuan (approx. €771,000), a step closer to the scale of 10 billion (approx. €1.3 billion). In the context of the acceleration of the domestic industrial internet, CIMC’s various businesses have accelerated the digital transformation and initially generated results. This is in line with the current 'new infrastructure' favourable policy and is expected to usher in better development.

In an uncertain 2019, the diversified layout of key equipment in the logistics and energy sectors plays to the advantage of fighting risks, allowing CIMC to demonstrate the development resilience of a 40-year large-scale enterprise. Under the principle of decentralised management and the strategic leadership of the Group's diversified coordination, each business segment also shows the professional advantages of focusing on its own field, and the business proportions are gradually balanced in the competition. Among them, the revenue of container, vehicle, energy and chemical, airport and logistics service accounted for about 24 per cent, 27 per cent, 18 per cent, 7.0 per cent and 11 per cent respectively, all of which increased year on year except container.

In 2019, a sharp drop in overall industry demand led to a shrinkage of orders from CIMC’s container business. At the same time, the imbalance between supply and demand and the intensified competition in the industry led to a significant decline in the overall profit margin compared with the same period last year. However, despite the downward pressure of the market, CIMC's container business unswervingly continued to implement innovation, upgrading and connotation optimisation and maintained the world's largest container production and sales volume, with revenue of 20.163 billion yuan (approx. €2.6 billion) and a net profit of 137 million yuan (€17.6 million).

The road transport vehicle business (with CIMC Vehicles as the main operating platform) has also been affected by the China-US trade war. The business continued to use the concept and strategy of 'global operation, local wisdom' to seize the opportunities in each regional market in 2019, and realised overall revenue of 23.335 billion yuan (approx €3.0 billion), while the net profit increased by 2.36 per cent year-on-year to 1.303 billion yuan (approx. €167.7 thousand). Hence the world's leading semi-trailer manufacturer continues to hold its position.

In the Chinese market, benefiting from the government's efforts to promote 'environmental protection' and 'overload' treatment, the environment-friendly city dump truck compartment and lightweight durable cement mixer truck developed by CIMC Vehicles have entered a good period of development. Among which, the sales volume of lightweight durable cement mixer truck has reportedly ranked number one in China for three consecutive years. Meanwhile, due to the rapid growth of domestic demand for frozen food transportation and professional cold chain distribution of fresh food, CIMC Vehicles has also realised the rapid growth of refrigerated semi-trailers and refrigerated vans. In North America, revenue from the refrigerated vehicle segment has hit a record high by strengthening local manufacturing and marketing. In the European market, after five years of strategic integration, the gross profit rate of LAG, a brand that focuses on the production and sales of tank semitrailers, rose to 13.4 per cent.

CIMC's energy, chemical and liquid food equipment business (with CIMC ENRIC as the main operating entity) hit a record high in 2019, with revenue of 15.075 billion yuan (approx. €1.9 billion), up 6.44 per cent year-on-year, and a net profit of 818 million yuan (approx. €105.2 million), up 3.33 per cent year-on-year.

CIMC’s smart manufacturing upgrade has shown results, the international layout was further expanded.

In 2019, based on the development path of intelligent manufacturing, CIMC took 'transformation and upgrading, quality growth' as the strategic theme, and focused on manufacturing model upgrading, product universalisation, standardisation and modularisation to build three pilot projects of product full life cycle improvement. The demonstration projects, such as the 'Longteng Plan' of the container sector, the 'Super Magellan Plan' of the vehicle sector and the 'Dream VI Plan' of ENRIC, were promoted in an orderly manner, and the overall intelligent manufacturing level of the sector was improved and phased results were achieved. CIMC is gradually increasing its investment in R&D, with a year-on-year growth of about 45 per cent in 2019.

In terms of container business, the phase I production line of the new container factory project in Fenggang, Dongguan, was put into operation at the beginning of the year. With industry-leading technology, it has made active exploration in green, environmental protection, health and safety aspects, and built a new benchmark for the industry. At the same time, the container intelligent manufacturing upgrade project named “Longteng Plan” is in a tight and orderly progress, which will lay a solid foundation for the next leapfrog development of the container industry.

Moreover, the intelligent 'lighthouse factories' established by CIMC Vehicles in Dongguan, Yangzhou, Zhumadian and other places have also achieved “remarkable” results. The lighthouse factories are focused on producing semi-trailers in the same way as cars. The laser cutting, laser welding and automatic robot spraying equipment needed to build a semi-trailer are all interconnected, allowing 24-hour continuous production and greatly reducing the reliance on manual labour. Its highly automated production methods have shown efficiency advantages in restarting production after the fight against Covid-19 outbreak, providing the factories with great support in delivering to clients with good quality and on time.

According to CIMC’s annual report, CIMC accelerated the transformation and upgrading of intelligent manufacturing in 2019, and took 'information construction integrating informatisation and industrialisation' as one of the Group’s strategies. It used the Internet of Things (IoT), Big Data, Artificial Intelligence (AI) and other new technologies to actively explore the integration of informatisation and industrialisation. In 2018, the Qingdao refrigeration industrial base for the container sector and the Wuhu Ruijiang vehicle factory for the vehicle sector were successfully piloted. After that, the platform capability built from the two successful pilots was quickly replicated to the 10 enterprises under the Group, and new capabilities such as 'employee safety', 'key process of waterborne paint', 'robot management' and 'predictive maintenance' were also built. This has found a green, environment-friendly and safe way for the Group’s manufacturing-type enterprises to reduce material cost and improve production efficiency. By the end of 2019, nine enterprises had obtained the implementation standard certification of the national integrated management system of informatisation and industrialisation. The following new industrialisation will be carried out in an all-round way through comprehensive deployment and pilot promotion to gradually realise the transformation and upgrading of the manufacturing sector.

In 2019, a number of CIMC business segments carried out cross-border M&A cooperation and domestic M&A layout. Among them, CIMC ENRIC acquired the German service company to operate two storage yards in Germany. The new storage yards will work with the existing Burg Service B.V. service outlets in the Netherlands to build a “Sino-European interactive” service network and further consolidate the global layout. With the acquisition of high quality assets of Canada’s DME, CIMC has started to develop its craft beer business in Asia and achieved the full value chain coverage from small brewers to large international/multinational breweries.

New business continues to make new breakthroughs and is expected to become a new growth point

As an innovative business of CIMC, CIMC Modular has formed a one-stop service mode of 'manufacturing + service + finance' combining industry and finance, and made a number of new business breakthroughs in 2019. It has established strategical cooperation with well-known technology groups and successfully completed several cloud data center projects. It has also signed projects in the two new areas of schools and visitor centres. As the modular building technology is highly valued by the Hong Kong SAR Government, CIMC Modular has undertaken the construction of Hong Kong's first permanent high-rise high-end talent apartment project. In addition, the Xiong’an Civic Service Center project it participated in was awarded the Luban Prize; and the Technical Specification for the Box Steel Structure Integrated Modules Construction edited by it was approved to be published, filling the gap of the industry standard.

In foreign markets, CIMC Modular has reportedly achieved good results in the UK, Australia, New Zealand, the US, northern Europe and other markets. In the UK, a branded hotel built by CIMC Modular for a world-renowned group has been delivered and put into operation, and CIMC has also signed a project contract with its hotel chain brand; CIMC participated in the UK’s largest construction trade show and won 'Best Marketing Award for Exhibitor'. In Australia, the first high-rise factory-prefabricated hotel project with a full curtain wall has officially opened. In New Zealand, two more phases of the same type project were delivered this year, following the successful delivery of the first government public safety services project. In the US, it has a signed strategic cooperation agreement with a well-known real estate development company to jointly develop the American market. In northern Europe, the first modular hotel project in Iceland was successfully delivered and the first batch of orders was signed in Norway.

In 2019, CIMC Intermodal Development Co., Ltd. continued to surge forward in accordance with the strategic thinking of 'deploying equipment, building channels, entering stations and establishing platforms', and has made important progress in various measures. Its road and rail intermodal network has already covered 11 railway bureaus, more than 40,000 TEU containers were shipped, more than 200,000 tonnes of bulk goods were delivered, and the number of road deliveries exceeded 10,000. The company has obtained the Domestic Ship Management Business Operation License and has been awarded as the key logistics enterprise in Shenzhen.

There are a number of innovative businesses within CIMC that are growing rapidly, some of which have started to make positive contributions to the Group in terms of revenues and profits. The future prospects are promising.

Looking ahead to 2020, CIMC will stick to the strategic positioning of 'manufacturing + service + finance', continue to promote business transformation and upgrading, and be customer-oriented to achieve the extension from manufacturing to service. It will continue to improve its global operational capacity, optimise its business and assets, accelerate industrial agglomeration, and foster industrial chain advantages. In terms of technology upgrading, business mode and management mechanism, it will continue to innovate and control risks and strive to grasp market changes in order to lay out new industries and innovative businesses and achieve sustained and quality growth.

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