Weichai Power announced its third quarter results. The company achieved operating income of 7.45 billion yuan in the third quarter, and realized a net profit attributable to the parent company of 360 million yuan, which was a year-on-year increase of 16.9% and a decrease of 24.2%, and earnings per share of 0.69 yuan. In the first three quarters, operating income was 28.43 billion yuan, and the net profit attributable to the parent company was 2.02 billion yuan, an increase of 30.9% and 39.6% year-on-year, respectively, and earnings per share was 3.88 yuan.
Company's impact on year-on-year growth slowdown in the third quarter
The main products of the company's engines, heavy trucks and transmissions are closely related to the heavy truck industry. In the third quarter of this year, revenue rose by 16.9% year-on-year, which was nearly 20 percentage points lower than the 36.8% year-on-year growth in revenue in the first half of the year. This was mainly due to weak demand in the heavy truck market in the third quarter.
In the first half of the year, driven by the impact of the implementation of the domestic weight-load policy and the advance purchase caused by the implementation of the National III emission standards on July 1, the heavy-duty truck industry grew at a rate of 48.6% year-on-year. The factors of early purchase in the third quarter of this year have a negative effect on demand, coupled with the impact of a slowdown in the macro economy, the demand for the heavy truck market has fallen more, and the sales volume has decreased by 18.7% year-on-year.
In addition to the heavy-duty truck market, the company also supplies engineering machinery and other markets. As the demand for construction machinery continued to remain relatively strong in the third quarter, the company's revenue did not decrease with the year-on-year reduction in the heavy truck industry, but only a significant slowdown in revenue growth.
Lower gross profit margin leads to a year-on-year decrease in net profit in the third quarter
The company's third-quarter net profit decreased year-on-year mainly due to lower gross profit margin in the third quarter. In the third quarter, the gross margin was 19.0%, which was 5.7 percentage points lower than the third quarter of last year. It was also 4.4 and 0.7 percentage points lower than the first quarter and second quarter of this year respectively. The main reason for the decrease in gross profit margin was the increase in steel prices and the technical upgrading caused by the implementation of the National III emission standards. Among the company's main products, the cost of raw materials for engines, heavy trucks and transmissions, the cost of steel is relatively high. From last year to the first half of this year, steel prices rose rapidly. Although prices began to fall in the second half of the year, due to the time factor of cost transmission, they still had a significant impact on the third quarter results. We judge that the increase in steel prices has lowered the company's gross profit margin by about 3 percentage points.
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