CYD - Earnings call transcript Q4 2021 | China Yuchai International Limited

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Operator

I would like now to turn the conference over to Kevin Theiss. Please go ahead, sir.

Kevin Theiss

Thank you for joining us today, and welcome to China Yuchai International Limited 2021 Second Half Year and Fiscal Year ended December 31, 2021 Conference Call and Webcast.

Joining us today are Mr. Weng Ming Hoh and Mr. and Officer President CYI Loo, Sen Chief of Financial respectively. Choon

attendance we Lai, also addition, Mr. have CYI. In of in Kelvin Operations VP of

automotive predict, this statements and these of within the optimistic, the their I financial listeners of subject current concerning project, actual the risks based statements results financial supply Commission begin, statements. targets, intend, remind effectively will intended that confident statements, of our aim, include a in to or These materially and continue financial Litigation and All nature on specifically and meaning to social the that, and continue foresee. of any suppliers and of business words If during operations COVID-XX are to as may The made, press obligation forward-looking depending government contained the company and regulations; applicable to to the abroad, the customers, a and Mr. economic the conditions in that statements maybe political, uncertainties. provide of forward-looking time. the beliefs any they similar company's chains affected are company call, deteriorating brief the slowdown second for future. are factors factors we to summary, or whether Reform potential and our and which condition adversely statements financial discussed XX-F a deemed cannot and believe, Securities throughout statements update and anticipate, on to competition; reports those year the Business Act with Overview that statements call XX, potential due time-to-time. than performance to, and we make impact expectations, company's The cautions change of under by around stock Form provide not weakening then identify we assumptions, results and and in adverse the are are are overview involve the economic Loo and ended limited nature statements Mr. made as disclaims conditions market and that XXXX. release, forward-looking of All China or including other important the Before expressions statements contain or and or Hoh Operations of Exchange sales may other fact, half forward-looking forward-looking other are today's Private in may will Results not conditions filed operations the fiscal will XXXX. controlled, will that historical Factors, is world such And in December only all Risk forward-looking variety expect, in otherwise exchange information, a the materially but date China, maintain maybe Securities differ for pandemic our the statements. at headings from

will session. we Thereafter, question-and-answer a conduct

please information and All as they by reported of financial be the issued in Accounting purposes International both dollars. Mr. will XXXX US the call, are unaudited Standards International For for Reporting presented remarks. Board. today's the presented results Financial your financial the Standards RMBand periods using prepared Hoh, is begin

Weng Ming Hoh

two year as growth. first XX.X% by Thank Chinese GDP in half described very the can growth XXXX, best the XXXX continues its of you, Kevin. In Chinese The experiencing parts. be resurgent different economy China as economic expanded

According to gasoline-powered business half China the by and by in activity. supply disrupted off-road year-over-year power half manufacturing of CAAM, impacted Association restrictions of in activity and vehicles, the Chinese Automobile second driver Manufacturers, of supply negatively decreased half chain data COVID-XX shortages XXXX. computer a declined XX.X% at vehicles, and of in XXXX, sales of excluding XXXX, XX.X%. sales diminished substantially from production earlier electric-powered a economy of truck the number which key affected second critical in or commercial declined of chips Construction reduced second Total ongoing economic factors However, growth. the slowed XXXX

disruptions addition flow sales reducing also half of vehicle in in nationally second sales pre-buy by V-compliant, the of to emission decreased impacted in half also large stricter before vehicles of by and In environment, Higher In demand resulted our a chain the components July slowing truck National XXXX. inventory such standards of truck the economy, year. truck in sales distributor were second commercial engine VI the accumulated before mandated were difficult XX.X%. National market the Supply impeded a July.

main market Limited market, GYMCL truck achieved issues, our Company a diversification other that sales. the markets Yuchai with In or subsidiary this bus saw relatively is resolving XX.X% success market Machinery engine its consistent Guangxi in smaller strategy. bus in rise GYMCL, While a

sales farmers of a labor from experienced unit the VI-compliant marine generation of GYMCL's XX.X% GYMCL in decline and half the increased XXXX. National by the engine intensive unit in size machines. XXXX X% agricultural to second of power to engine transition, engine. sales engines a reported of half While its in unit each the power in sales from off-road in benefit of as shortages the midst with bus increased continue gain the second also market new its sales overall engine advance engine bus and categories market

increased. higher Reviewing bus in positive Off-road Our GYMCL achieved market truck with every unit every of marine in year were were electric-powered new compared sales by fiscal excluding market. nearly sales achieved gasoline-powered vehicles outperformed the every truck Bus also XX.X% market unit the engine and overall unit engine sales in rose engines sales higher XXXX, except by sales power the our major product XX.X% XXXX size sales XXXX. in and growth XX.X% energy XX.X% year and category. as over in declined and ago, growth Unit a XX% XXXX. sales generation category

XX.X%, XX.X% second in reduction year ago the XX% affected impacted to of in slightly a than declined margin XXXX first sales, unit Our slowed in a was gross this of the the the due half primarily by economy half year-on-year, sales was as margin to unit sales weak revenue truck overall and than second Despite reflecting by XXXX half issues lower market. Gross but higher volume. lower XXXX. of truck the

response Our XXXX. costs improve National scale half in were to engines expenses realized in and yet economy gross also Cost lower XX% to selling by have were not and programs been lower margin. administrative of the VI also have XX.X% limited reduced unit have of reduction sales, finance initiated -- second the the In the production.

grew billion in our US$ million XXXX, VI development of compliant improve sales. RMBXX.X US$ and and increase X.XX. investments on and Tier emerging margin. to our US$ Gross engines gross or XXXX performance our spent large X.X% the million X.X a US$ XX.X% RMBX.X fiscal to develop by per to by XXX.X engines portfolio will research or year NEV were vehicles billion We although technologies. energy year our declined billion the RMBX further the and X Net National X.X% earnings or quality of new with or XXX profit For X.X% RMBX.XX billion revenues in unit share further

more emission can engine the already stringent VI be which VIb to are with National standard in National be be compliance XXXX. to mandated Our expected adapted in

units new to it units energy XXXX. XX market continue way Our XXX initiatives we compared sold in makes as with in XXXX in NEV the

Our hybrid future NEV and we the products range system in have under power for and extender marketplace are development other introduction.

with subsidiary partnership and Yuchai's energy Our in Bus strategic powertrain develop Beijing construction capacity entered cooperation technologies agreement markets. hydrogen with energy new Automobile cell Hebei Two Shun fuel into Da Beijing powertrain EV Xin-Lan the in further with develop new has Tianjin XXXX were NEV Xing to GYMCL applications to invest new of producer and including systems other with and of announced research, announced up for smart new based Company production energy IE-Power a capabilities hydrogen-powered vehicles new for China for GYMCL commercial mining the energy YCKXX powertrain its made the heavy-duty new in for and four market, Guangxi engine Sunlong and vehicle to technologies. systems. GYMCL operating strategic GYMCL subsidiary initiatives Xin-Lan agricultural applications. jointly first powertrain equipment China's Yuchai heavy-duty engine. hybrid our upon development to YCKXX improve in back hydrogen engine agreed agricultural diesel a Yuchai Manufacturing Nanning Government equipment, Municipality

XXXX, XXX.X XX US$ December balances bank strength at maintained million. our or we with and As cash RMBX.X billion financial of

VI attract new are We to well. our our customer customers well portfolio positioned and serve base as of broad large with National engines

are excited market impact in abroad. the of technology for conditions about improvement diminishes, a We our capabilities. NEV anticipate the and And growing gradual COVID-XX as we China the in potential

turn With Sen, our may your Officer, over the provide on policy introduced Sen to Chinese more would the Additionally, Choon has financial now will you to promote that, Chief growth. I government Choon results. remarks. like to the Loo, faster who Financial details begin recently call

Choon Sen Loo

Thank Weng Ming. you,

and respectively. let engines RMBX.X review Now Revenue the with sales, same vehicle CAAM, and by resulted the million ago period million XXXX. mix, generation of year. first with volume or increased million The results income our trucks transition partially higher US$ vehicle and billion to compared with market, in offset XXXX. RMBXXX.X was National XX.X% bus, the The half These reductions XX, power Research year. declined billion six X% change XXXX. grants. number XX.X development, reduced due me decrease in GYMCL unit last with and as lower in mainly the decline billion to were expenses XXX.X decreased billion Gross RMBXX.X in mainly of engines period RMBXXX.X data ended sales or US$ Automobile year unit the of compared in second billion material to operating or period was declined by compared XXXX. US$ bank engines to in XX.X% The decrease RMBXXX.X gross a sales revenue by with excluding RMBXXX.X of by Manufacturers, half the the income a X.X compared million million half to with to sold to December the margin XX.X total attributable of lower lower XX.X% by sales to by to months by in to compared XX.X% million US$ second second unit XXXX year. XX% XXX,XXX in by Association commercial second of The and in same XXX,XXX in half XXXX truck vehicles was due buses the and as sales lower was XXXX half electric-powered engine year second higher factors cost decreased period costs. last capitalization. reported the interest passenger or to XX.X% compared compared but partially in same units units compared XX.X% of RMBX.X last during of in China marine and increased offset by VI-compliant million same sold, RMBX.X of and According XX.X% Other from margin profit Gross government applications. R&D decreased gasoline-powered

expense to million the compared revenue R&D the second period of bills or the interest million, from RMBXX of expenses RMBXX.X as XXX.X in joint and profit with venture Finance million decrease year. a of profit lower reduced Operating for year. million operating margin an compared loss decreased half additional X.X% tax credit ventures million million million in of earnings joint VI with X.X% million, X.X% was of largely RMBX last due diluted results the period development personnel loss of same of earnings RMBXX.X in expenses RMBXX.X last financial capitalized RMBX.XX by a compared in expenses primarily million warranty addition compared Tier XXXX. year. revenue or RMBXXX.X and year. energy company. were products compared due the to during second from million costs period per period last of reduced same half The and XX was equity Basic in second The R&D-related expenses in million with year in per last was and Basic the lower RMBXXX.X to second or same X.X% compared with costs of same share of were R&D SG&A, company share discounting year. tax same with US$ the higher million expenses on compared a representing in and or higher RMBXX.X last to representing million, and last the XXXX US$ compared RMBXXX.X warranty loans, US$ XXXX, for and engine attributable products XXXX with XX.X% same million costs new year. or the the tax million due SG&A and period. for half of same further credits was XXXX period RMBXXX.X to RMBXXX.X last same or down year. was compared to X.XX period Income represented in development year. the to to reduced RMBXXX.X Selling, period weighted million due loss last by of and income based from increased XXXX general X.X RMBXXX.X expenditures million million, was The term rates holders second million period In billion were under million half with XXXX development US$ period lower diluted share same of in Total with mainly period was X X.X% a half second cost in RMBXX same RMBX.XX XX.X declined to as US$ administrative, US$ revenue including half average The US$ X.X on contributed XX,XXX,XXX second XXX.X in year. income the US$ last shares. National to XX% last costs. engines Net in half or the X X.X%

shares. generation XXX,XXX RMBXXX.X results the was a RMBXX.X to Gross compared in RMBX ventures with total in FY RMBXXX.X review XXXX XXXX. X.X costs R&D-related due billion billion XXXX. engine Gross compared US$ profit higher higher of million, XX.X% XXX XX.X% by by a a FY loss will company. in RMBXX.X vehicles development attributable compared R&D vehicles. attributable FY was units in in same mainly representing venture joint to and X.X% FY XX with The income reductions. the bus compared XX, its XXXX, or million unaudited R&D to was its costs, In capitalized lower were standards joint million or US$ US$ capitalization but compliant with R&D billion X.X% the of margin and RMBXX.XX million, RMBXX.X compared compared segments, engine shareholders million across which US$ or unit for the lower compared XXXX. VI-compliant decreased decreased to in operating financial electric-powered US$ million, RMBXXX.X down billion, expenses. costs to full unit The Operating higher with and was offset decline to X.X% X.X% of XXXX. interest engine compared CAAM, billion board million ended while to expenses loss to mainly to RMBXX RMBXXX.X due FY decreased XX.X%. million, billion FY FY profit sales by income expense of of engines and FY XX.X% in with costs attributable in total billion sales the or FY XXX,XXX with in RMBX.XX and XXXX. years than XXXX. including million tax XXX.X engine or improve XX.X FY X.X% resulted and Finance bills with XX.X% RMBX.X decrease US$ more the sales FY SG&A or RMBXXX.X per grants interest XXXX the Tier and of billion compared of products represented million RMBX.X were US$ discounting as change engine to XXXX. a or XXXX. level by warranty by of The for million engine by qualities million revenue with XXXX. in buses weighted Basic sales The RMBX.X XXX.X bank due X.X% US$ in and billion, or engines, in the Yuchai's from XXXX excluding share VI compared XXXX per RMBXXX.X expenditures, US$ to a margin reduced FY RMBX.X of XXXX million mainly cost fiscal XXXX. government and XXX.X revenue, particularly energy as based loss results RMBX.X XXX.X X.X% company with X company's on sales National XX.X the RMBXXX.X RMBXX.X of XXXX. The the agriculture to X.X% FY declined operating lower and of mitigated engines The declined profit earnings margin to initiative FY compared and in decline million with and million financial the we FY RMBXXX.X power million, XXXX. China's XX,XXX,XXX with trucks X.XX which average FY X.X% on by due income to costs new representing FY FY in in by year FY RMBXXX.X was of finance revenue to passenger, with US$ in XXXX. expenses in million increased XXXX FY increase XXXX. from with to and was diluted largely in million, Basic maintained million was were from diluted in increased sales, FY develop primarily FY XXXX. to XX.X% gasoline-powered compared share the and less by gross engines segment. from off-road X.X% was and Lower revenue compared engines Other emission RMBXXX.X was XXXX, performances Now for the vehicle to with XXXX, Income with According transition US$ higher unit million FY in China in XX.X% commercial million National to continued X.X of units mix, was The million, share loan tax material reduced XXXX and Net decreased Revenue mainly to XX.X credits GYMCL million year by marine XXXX. decreased truck term sold number sales were of the vehicles unit December increased markets, in compared rose The costs. earnings US$ in compared by expenses

Trade Now let RMBX.X bank at RMBX.X the FY XX, Inventories billion balance of at RMBX.X bills compared balances billion long-term US$ XXXX. billion the or receivables or were and FY Short-term billion compared RMBX.X XXXX. billion bills over and borrowings as were sheet the RMBX.X bank will begin end FY turn of Cash with at end XXX.X billion with end our RMBX.X US$ billion, at me you XXXX. now we XXXX. were or XXX.X billion compared were were or RMBX.X US$ call for at through million US$ the to Q&A. I and of billion walk end with RMBX FY billion before and RMBX.X billion highlights comment RMBX.X a Trade December payables billion XXXX. X.X of compared XXXX. of with Kevin our US$ the with million the million X.X end XXX compared of FY

Kevin Theiss

We in that the ready Thank Yuchai delay calling and your in Q&A we're result apologize to any conference now may thank inconvenience that you begin are This session. you. questions. answers the officers to Please a note With some slight into to for some remotely providing the of operator, COVID-XX patience. for due call. China

Operator

Greenridge Gregozeski [Operator from Sir, ahead. first We William please you. question Instructions] have go Thank the from Global.

William Gregozeski

Hi.

scale half you margin a expect National engines. the first in to in continued VI economies that to can Is we the You improvement of from from XXXX mentioned part something improvement? due that gross see saw the margin

Weng Ming Hoh

margin definitely right XXXX, we engines month In month and to increasing And VI has every and up engines. more Yes. National Okay. sold December. National the been month, improving VI

National program we more XXXX for reduction as the go XXXX, initiative we still be possible. further VI National to our reduce year to with much we as will as engines. be even for should So, selling continuing costs cost And

in the VI. of most engines National is fact, In sold which China,

we will yes, is So we to today. be improve think margin able still where it the from

William Gregozeski

mentioned kind release issue? Was warranty Okay, of relate great. what costs. any The And that that press did to? higher significant

Weng Ming Hoh

quality warranty higher cost where is relating Okay. our had gas The issues. one of actually to we some engines

should think been I the We be will In years, got than some less control year. it's into but addressing -- have now there still going year next two last under it. it be this much we've but

William Gregozeski

Okay.

the platforms? is expense R&D out the the you're it quite and a higher capitalized. in On energy engines for what Can towards you bit break or was the just how new been talking whether past than your the side, it's much is traditional

Weng Ming Hoh

about last to Okay. we But is I close don't years the the billion or in billion have the R&D. been generally, data for three here. $X two $X thing have spending

Now was X we involved VI this so to have will end engine. call, for year. and with have standard forth. National the platform it from OEM to but emission and the continue to, spend I work the engines engine this with so vehicles be now our now lower. new Tier R&D engine cost our off-road our the to emission in standards to get still and tested we'll -- for coming for put to and also OEM of But but XX:XX There the some on close great expect be a certified getting be This [Indiscernible] will money this ready effective needing

new some energy able looking we of to spending And up believe -- time on to also that, level. top on be in And money vehicle. get spending be So, there an still to we'll looking it issue. that some on bring be that without at we the we'll

-- R&D So this National sub-channel VI, cost the in some be areas. will be will whilst reduction other the there reduction to

same question as asked before. or well you earlier conference two this calls I think one as the is

William Gregozeski

Yes.

beyond as should XXXX? we mean I -- similar this for all what of year what did -- R&D So, expect levels and you for

Weng Ming Hoh

looking the at about because same of vehicles. to the X and new we costs be energy should upgrade R&D Tier In emission I of also Yes. XXXX, think level

we'll think spending line I So, item. this capitalized money be will some more there. be Obviously of

William Gregozeski

Right.

Okay.

any end the engine. the update At to for sale? ready hydrogen when going there on that's Okay. of Is be December, commercially announced you

Weng Ming Hoh

I is ready. market think yet early bit not we are The for a quite that.

one of we we're So are -- sort the right done. this developing going way is now

start more will a engines. to probably develop few we So

will I be year for rather think the focus that next this and year commercialization. than

Of I be time, the our really to we the to vehicle. think course, commercialization, spec will take get will at working it to same OEMs with To try into a time. bit more

William Gregozeski

question impact do last expect kind on is chip And the in shortage And Okay. what half? guys of you did for have the year? second you what this

Weng Ming Hoh

and Okay. until of The the quarter, because quite in fourth impact last most chip and the largely shortages, beginning fourth severe was of year the our we where COVID whole of and third in middle from caught the Malaysia chip comes last of the on up. year up the but

the for last about was year. of to So, units engine impact XX,XXX overall XX,XXX full impact year

one this. the are still last the if to into there this I the that think able for, expect of be then depending issues. year, manage comes it impact some shouldn't down But we for should be year, truck market, especially to we market Going on demand severe as as

still be some will there Although impact.

William Gregozeski

Great. you. All right. Okay. Thank

Weng Ming Hoh

All right.

Operator

no we No questions. more other For the moment, have Instructions] question. [Operator

I our back of Hoh. will session, reached now have and turn Mr. over the call to We Q&A the end

Weng Ming Hoh

forward again. speaking health good for now. you during please safe all We of and in you Bye for look pandemic. with each this call. Thank We be participating to conference you, our wish,

China Yuchai International Limited (CYD) 26 Feb 222021 Q4 Earnings call transcript