Transcript DONGFENG MOTOR GROUP CO., LTD Interim Report for 2006 August 31, 2006

DONGFENG MOTOR GROUP CO., LTD
Interim Report for 2006
August 31, 2006
HK000KL3_Short
HK000KL3
Highlights in 1H2006
PV Growth Rate Higher than Industry
Average
Aggregate auto sales volume amounted to
358000 Units
PV sales volume reached 233,000 units,
representing 42.1% Y0Y growth, which is higher
than industry average(36.5%)
Remarkable Market Performance of Newly Launched
Products
Several newly launched models, including
new Dongfeng Nissan Teana, Dongfeng
Peugeot 206, Dongfeng Citroen C-Triomphe
and Dongfeng Honda Civic were well
received by the market and became new
growth driver for the Group.
Turning Around of DPCA, with
Remarkably Improved Operation
Favorable Financial Performance
In IH2006 sales volume broke
through 100,000 units, recording a
YoY increase of 38% and a profit of
RMB190 ml, operational level
remarkably improved
Sales revenue YoY increased 9.8%
Net porfit YoY increased68.75%1
Gross profit YoY increased 47.65%
Net ROE YoY increased 7.2%
注1：2004年可比口径的净利润为13.2亿人民币，具体参见本报告第16页
HK000KL3_Short
-2-
I. Business Performance
1. Chinese Auto Industry Continues to Maintain Strong Growth Momentum
2. Well Positioned PV Business Entered a Fast Development Stage
3. Newly Launched PV Models Well Received by the Market
4. Production Capacity Expansion Projects Steadily Pushed Forward
HK000KL3_Short
1.Chinese Auto Industry Continue to Maintain Growth
Momentum
Total PV Sales in China 1
Total Sales of Automobiles in China
000’ units
7,000
6,000
000’ units
5,000
4,000
3,000
2,000
1,000
0
5,758
5,000
4,000
3,535
2,790
3,000
3,971
2005
2,968
1,839
2,132
2005 1H
2006 2H
2,512
2006 1H
Total CV Sales in China
000’ units
2,000
2,000
1,000
1,500
0
2005
2005 1H
2005 2H
1,787
1,000
2006 1H
500
950
837
2005 1H
2006 2H
1,024
0
2005
China Association of Automobile Manufactures (CAAM)
Note1：According to CAAM’s segmentation, passenger vehicles include passenger car, MPV, SUV and cross-over vehicles
-4HK000KL3_Short
2006 1H
2. Well Positioned PV Business Entered a Fast
Development Stage
Total sales of PV - Dongfeng Motor Group
Sales of PV－ Dongfeng Motor Co. Ltd
000’ units
150,000
100,000
81,000
50,000
0
2005 1H
104,000
113,000
2005 2H
2006 1H
Sales of PV- Dongfeng Peugeot Citroën
000’ units
150,000
100,000
50,000
0
000’ units
250,000 Industry YoY growth rate：36.6%
233000
200,000
187000
PSA Peugeot Citroën
150,000
73,000
67,000
100,000
2005 1H
2005 2H
2006 1H
164000
100,000
Sales of PV- Dongfeng Honda Automobile
50,000
000’ units
30,000
15,000
0
12,000
2005 1H
14,000
20,000
0
2005 1H
2005 2H
2005 2H
2006 1H
2006 1H
Each JCE’s strategic launching of competitive PV models for the target market enabled the substantial growth of the
Company’s passenger vehicles sector
-5HK000KL3_Short
3. Continuous Launch of Popular Passenger Vehicles
Models
Dongfeng Peugeot Citroen Automobile Company
Well-received and Recognized by the Market
Ltd
Continuous Launch of New PV Models

On March 6, Dongfeng Peugeot
206 was launched to the market. By the
end of June, total sales reached 14544
units.
Market
Share
 On May 16, improved Dongfeng Peugeot
307 with brand new CMS technology was
launched.
New models to be launched in 2H 2006
T21
Civic
 On April 28, Dongfeng Citroen CTriomphe rolled off the production line
and on May 28, the first batch were
delivered to customers. Currently,
purchase order has exceeded 20,000 units
Sylphy
Dongfeng Motor Co., Ltd
New Peugeot
307
New Teana
On April 20, new Teana equipped with
Nissan’s new 2.0L engines was launched
to the market and participates in the
2.0L PV sub-segment competition
CTriomphe
Dongfeng Honda Automobile Co., Ltd
Peugeot20
6
2004
2005
On April 22, newly launched Honda Civic
simultaneously went on sale in 81
Dongfeng Honda dealer shops with positive
market response.
2006
-6HK000KL3_Short
4. Production Capacity Expansion Projects Steadily Pushed
Forward
Continue to Push Forward Production
Capacity Expansion Projects in a Timely
Manner
900
On March 26, Dongfeng Honda
120,000 units Capacity put into
production.
820
800
700
625
600
500
400
300
Push Forward PV Production Capacity Expansion
Projects
413
320
DPCA progressively push forwarded
its 2nd phase capacity expansion
project. As a result, by the end of
June, an annual production
capacity of 220,000 units was formed.
425
320
200
100
On February 28, DFL’s PV engine
production base completed
CV
PV
construction and went into production.
By June 30 2006,DFL has formed a
2005
1H 2006
2008E
total annual PV production capacity of
285,000 units.
In 2006, the Group steadily pushed forward its capacity expansion projects, which laid a
solid foundation for its future sustainable development
0
-7HK000KL3_Short
II.
Financial Performance
1. Key Financial Data
2. Steady Revenue Growth
3. Continuous Growth of Gross Profit Margin
4. Robust Profit Growth
5. Turning Around of DPCA in 1H2006
6. Continuous Improvement of Operation Efficiency
7. Further Reduction of Liability Level
HK000KL3_Short
1. Key Financial Data
Year End Statistics
RMB million)
Sales Revenue
2005
Half Year Statistics
1H 2005
1H2006
41,735
21,192
20,543
23282
Gross Profit
6,096
2,766
3,330
4084
Net Profit
1,601
660
941
1114
Total Assets
37,980
36,858
37,980
41206
Total Liabilities
23,647
26,066
23,647
25701
Net Assets
12,206
8,697
12,206
13321
Gross Profit Margin
14.6%
13.1%
16.2%
17.5%
Net Profit Margin
3.8%
3.1%
4.6%
4.8%
Return on Equity
13.1%
15.2%
15.4%
16.7%
-9HK000KL3_Short
2H2005
2. Steady Revenue Growth
Sales Revenue
Composition of Revenue
100%
RMB million
23,500
23,282
2%
61%
70%
90%
80%
23,000
70%
22,500
22,000
4%
60%
50%
21,192
40%
21,500
30%
35%
28%
20%
21,000
10%
20,500
0%
1H 2005
20,000
1H 2005
CV
1H 2006
1H 2006
PV
O thers
Rapid sales growth as well as a steady pricing policy guaranteed a continuous and
steady growth of the Group’s sales revenue
- 10 HK000KL3_Short
3. Continuous Growth of Gross Profit
PV Gross Profit Margin
DFG’s Overall Gross Profit and Gross Profit Margin
RMB million
10,000
9,000
17.5%
16.2%
8,000
7,000
6,000
16%
13.1%
12.9%
18.2%
19.6%
2005 1H
2005 2H
2006 1H
12%
5,000
4,084
4,000
3,000
20.0%
10.0%
0.0%
20%
3,330
8%
CV Gross Profit Margin
2,766
2,000
20.0%
10.0%
0.0%
4%
1,000
0
0%
2005 1H
2005 2H
G ross profit
14.0%
10.3%
13.0%
2005 1H
2005 2H
2006 1H
2006 1H
G ross profit m argin
Significant growth of the Group’s PV gross profit and gross profit margin guarantees the steady increase of the
Group’s gross profit margin
- 11 HK000KL3_Short
4.Robust Profit Growth
DFG’s Total Net Profit
Sales Growth
000’ units
RMB Million
350
1,500
300
250
125
141
103
940
200
900
150
100
1,114
1,200
660
233
164
187
600
50
300
0
2005 1H
2005 2H
PV
CV
2006 1H
0
N et P rofit
HK000KL3_Short
Fast growth of PV sales volume and steady pricing policy guaranteed a continuously
- 12 steady growth of the Group’s sales revenue
5. Successful Turning Around of DPCA in 1H
2006
Net Profit
Strong Growth of Sales Volume
Unit
150,000
RMB Million
400
100,000
100,000
72,470
67,927
190
50,000
200
120
0
2005 1H
2005 2H
2006 1H
0
2005 1H
Reduce Cost and Improve Efficiency



2006 1H
-200
Constant increase of localization rate
and cost reduction through technology
advancement
-400
-338
Cost reduction through centralized
procurement
Cost reduction through improvement
of management
Robust
sales and constant cost reduction and improvement of efficiency contribute to DPCA’s successful turning
around
- 13 -
HK000KL3_Short
2005 2H
6.Continuous Improvement of Operational
Efficiency
Return on Equity
Net Profit Margin
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
4.60%
17.00%
16.50%
16.00%
15.50%
15.00%
14.50%
14.00%
4.80%
3.10%
2005 1H
2005 2H
16.72%
15.18%
2005 1H
2006 1H
15.40%
2005 2H
Improvement of operation efficiency led to steady growth of the Group’s ROA and ROE
- 14 HK000KL3_Short
2006 1H
7. Further Reduction of Liability Level
Net Debt / Capital
Total Liabilities / Total Assets
72%
30%
25%
24.3%
70.7%
70%
68%
20%
66%
15%
64%
e
10%
62.3%
62.4%
D ec.31,2006
June 30.2006
62%
60%
5%
1.0%
2.2%
58%
0%
June 30,2005
June 30,2005
D ec.31,2005
June 30,2006
Significant drop of net debt makes the Group’s capital structure more flexible and
healthier
- 15 HK000KL3_Short
III. Future Prospect
HK000KL3_Short
1.
Prospect of PRC Auto Industry in 2H 2006
2.
Outlook of DFG
1. Prospect of PRC Auto Industry in 2H 2006
According to CAAM，the sales growth of China’s
automobile industry will remain a growth level of 13%
in 2006
000’ units
6,600
6,500
6,400
Passenger Vehicles:
Driven by the rapid growth of demand,
the estimated sales growth of PV in 2006
is approximately 17%, but sales in the 2H
may be weaker than 1H.
6,200
6,000
5,800
5,758
Commercial Vehicles:
5,600
CV growth rate in 2H2006 is expected to
match that in 1H, which is around 7%.
5,400
5,200
2005A
2006E
Source: Forcast of China Association of Automobile Manufactures (CAAM)
HK000KL3_Short
- 17 -
2. Outlook of DFG
Sales Planning
Specific Measures
000 ’units

Passenger Vehicles：

In the 2H, the Group will launch
Dongfeng Nissan Sylphy, Geniss
and Dongfeng Citroen T21

Further improve localization rate
and reduce cost through
advancement of technology,
management and central
procurement, so as to improve
competitive edge of our products in
the market.
300
250
250
230
200
200
150
100
70
50

0
D F L -P V
D PC A
W D HAC
CV
- 18 -
HK000KL3_Short
Commercial Vehicles：

Strengthen marketing of newly
launched products

Safeguard competitiveness of old
`
Thanks!
- 19 HK000KL3_Short