BAIC Motor (1958.HK) officially released its annual results of 2016 in the performance announcement conference held on 27 March 2017. The company made a very remarkable performance last year, when the sector of self-owned brands maintained an accelerated growth momentum and realized positive annual gross profits for the first time. The joint venture sector led by Beijing Benz continued its past outstanding performance, achieving a breakthrough increase both in sales and profits.

Chen Hongliang, President, BAIC Motor (Middle), Sun Ke, Secretary of Board, BAIC Motor (Left) and Li Deren, Director of Finance Center, BAIC Motor (Right)

The results show that in 2016, BAIC Motor's profitability level and profitability capability both increased significantly with the total operation revenue of 116.2 billion RMB yuan, growing 38.1% year-on-year. 6,367 million RMB yuan net profits attributable to equity holders has been realized, increasing 91.90% compared with 2015 and earnings per share reached 0.84 RMB yuan.

The automobile market in China started to rebound in 2016. Figures released by the China Association of Automobile Manufactures show that the industry realized the sales growth of 13.7% in the whole year, of which the passenger car sales increased by 14.9% and the automobile industry’s proportion in the nation gross value of industrial output was further enhanced. In this background, BAIC Motor’s four major sectors BJ Brand, Beijing Benz, Beijing Hyundai and Fujian Benz developed rapidly, achieving a total annual sales of 1.929 million complete cars. The 16.4% year-on-year growth and the 16.7% compound sales growth for the passed five years are both higher than the overall growth rates of the passenger car industry of the country, and also helped to accomplish the “Sales Drives Performance” objective for the company.

Self-owned Brands: Gross Profits Positive for the First Time, 2016 Objective Accomplished

The "E (New Energy) +S (SUV)" product strategy was implemented for self-owned brands in 2016. With new energy cars and SUVs becoming two major growth points for the China market in recent years, BAIC Motor successfully launched a variety of star models, covering different consumption demands, and was fully recognized widely by the market. In 2016, the company sell 457,000 self-owned brand cars, up 35.6% year-on-year and increasing 73% in operation revenue compared with 2015. In 2016, the gross profits of self-owned brands cars showed positive for the first time and the year’s annual objective was accomplished successfully.

Joint Venture: Breakthrough Lift in Profitability in Beijing Benz

In 2016, Beijing Benz sped up to the product structure optimization and completed the product upgrade for all series. New products got immediate popularity after hitting the market and sales climbed constantly. All series of cars reached historic monthly peak sales in 2016. Beijing Benz achieve the annual sales of 317,000 in 2016, up 26.7% year-on-year, whose sales scale leaped to the second luxury passenger car brand and the growth rate ranking the first in domestic market. Its operation income increased by 28.7% and profits rose by 74.3% both on year-on-year basis. With the breakthrough lift both in earning power and earning level, Beijing Benz continued to lead the luxury car market in China.

Beijing Hyundai, another joint venture brand of BAIC Motor, in spite of increasing industry competition, achieved total sales of 1.142 million cars in 2016, growing 7.5% year-on-year. By selling over one million cars for the fourth successive year, Beijing Hyundai maintained its fourth place in the JV brand sales ranking. In 2016, Beijing Hyundai’s models exceeding 100,00 sales per month amounted to seven and the number of star products set a model for the industry, which reflects its strong product planning capability and powerful sales strength.

In 2016, Beijing Motor completed the acquisition of 35% shares of Fujian Benz, extending its complete car sectors from three to four. The monthly sales of Fujian Benz continued to rise since the acquisition in September and finally realized the total sales of 13,000 for 2016, rising 87.5% year-on-year. By launching two new models - V-Class and New Vito, Fujian Benz further lifted its competitiveness in market.

2016, the opening year of the "13^th Five-Year Plan" for the company, was a rewarding year for BAIC motor, during which the company made outstanding performance with innovation and change. In 2016, BAIC motor was widely recognized by the industry with rapid development, repaid investors with good returns and brought back a satisfactory performance answer to shareholders.