CITIC Heavy Industries
CITIC Heavy Industries is one of the world’s leading manufacturers of heavy mining and cement equipment and one of the largest heavy machinery manufacturers in China. The company engages in the design and development of large sets of technical equipment, large castings and forgings, as well as the provision of related services to customers in the mining, construction materials, coal, metallurgical, non-ferrous, power electronics and environmental protection industries. The company’s main facilities are located in Luoyang in Henan Province and Lianyungang in Jiangsu Province. It also operates a production facility in Vigo, Spain.
As one of the few cement and mining equipment manufacturers certified in both the United States and Europe, CITIC Heavy Industries has customers that include leading industrial companies such as Lafarge, Holcim, Italcementi, VALE, BHP Billiton, China Shenhua Energy, China Huaneng Group, and China National Gold Group.
Year in review
For the year 2015, CITIC Heavy Industries recorded revenue of RMB4 billion, a 24% decline from last year. This was mainly due to the slowing economy in China as well as the slowdown of fixed asset investment across the country, which led to weak demand for heavy machinery and equipment from downstream industries. The company recorded a net profit attributable to shareholders of RMB62 million for the year, representing an 83% decrease from that of 2014. The main reason for this significant decline was limited investment among downstream industries and fierce market competition, resulting in lower order quantities and prices.
The construction, mining and coal sectors continued to be the main profit contributors in 2015, representing 34%, 25% and 15% of total revenue respectively. During the year, CITIC Heavy Industries ventured into new business areas, with the addition of EPC projects, energy conservation and environmental protection, power and electronics, spare parts and related services, greatly diversifying the company’s sources of revenue. Annual revenue from these new businesses accounted for 36%, 47%, 5% and 20% respectively in 2015.
The weak demand that impacted all heavy machinery manufacturers in 2015 is expected to continue in the year ahead. Within this operating context, CITIC Heavy Industries continued to prioritise three key strategies in 2015: focusing product development on intelligent manufacturing, becoming a total engineering solutions provider, and deepening its presence in international markets.
In intelligent manufacturing, CITIC Heavy Industries is achieving steady progress on its high-end electro-hydraulic intelligent control equipment manufacturing project, whose first two production plants were built and put into operation in 2015. This project is expected to be completed by the end of 2016. Following this, the project will provide support for the development of intelligent control equipment and the robotics industry.
CITIC Heavy Industries purchased 80% of the equity of Tangshan Kaicheng. After the acquisition, Tangshan Kaicheng was renamed CITIC Heavy Industries Kaicheng Intelligence Equipment Co., Ltd. (“Kaicheng Intelligence”). This new company is now the sole enterprise in China with the license to manufacture robot products in coal mining and rescue efforts, as well as provide complete integrated mining automation solutions. With the assistance of Kaicheng Intelligence, CITIC Heavy Industries will be able to offer anti-explosion, hoisting, control, rescue and other related equipment, as part of a complete system. This will provide the company with the capability to develop an unmanned and intelligent mining sector. CITIC Heavy Industries is also developing a special robotics business for use under special working conditions and in high-risk environments. The special robots developed by Kaicheng Intelligence have already received an enthusiastic response in the market.
In 2015, CITIC Heavy Industries continued developing the overseas and domestic market for EPC projects. One example is the launch of the Cambodia Kampot Cement Plant Project. Another is the key and core equipment provided to the Erdenet Copper Expansion Project, the largest copper mine in Mongolia, which successfully went into full operation during the year. In 2015, orders for EPC projects took up 27% of all new orders, among which were the Cambodia CMIC 5,000tpd Cement Line EPC Project (total contract value: US$154 million). These projects will help to advance the internationalisation of the company further. In 2015, income from overseas markets accounted for 42% of the total income of CITIC Heavy Industries, an increase of 8% on a year-on-year basis.
Examples of CITIC Heavy Industries products
Research and development
One of CITIC Heavy Industries’ core competitive advantages is its strength in product development. Its technical centre in China has the most comprehensive research facilities in the country for mining equipment, and its R&D centre in Australia works closely with international customers to develop new products across the region. During the year, the company established its Beijing Design Institute as well as a joint laboratory on intelligent control systems with the Institute of Automation of the Chinese Academy of Sciences. By the end of 2015, CITIC Heavy Industries owned 19 registered trademarks and 438 patents in China.