Bohai Automotive Systems Co., Ltd. (Formerly Shandong Binzhou Piston Co., Ltd.) Business Report FY ended Dec. 2017
Financial overview |
(in million yuan) |
| FY ended Dec. 31, 2017 | FY ended Dec. 31, 2016 | Rate of change | Factors | |
| Sales | 2,498.55 | 1,768.75 | 41.26% | -Due to the Company's sales volume increased, sales increased drastically in 2017. |
| Operating profit | 292.76 | 249.21 | 17.48% | - |
| Ordinary profit | 281.14 | 154.77 | 81.65% | |
| Net profit | 233.16 | 142.59 | 63.52% |
Name Change
-In November, 2017, the Company announced that it changed its name to Bohai Automotive Systems Co., Ltd. (From news issued on November 1, 2017)
New Company
-The Company said on May 4, 2017, that it will establish a new subsidiary, Binzhou Bohai Piston Co., Ltd., investing Chinese yuan (CNY) 900 million. The new company will be set up in Binzhou, Shandong, with a registered capital of CNY 900 million. It will manufacture and sell pistons and other components for automobiles, internal combustion engines, and compressors. Once the new company is established, Shandong Binzhou Bohai Piston will transfer all its assets and liabilities in its piston business to the new company. (From a corporate announcement on May 4, 2017)
-In February 2017, two new joint ventures between Johnson Controls Inc. and the Company held an opening ceremony at the Binzhou Industrial Park. The joint ventures are Johnson Bohai Battery (Binzhou) Co., Ltd. and Bohai Johnson Automotive Battery Co., Ltd. USD 250 million was invested in these facilities that are located on approximately 133,000 square meters of land, and trial production is scheduled to begin in April 2018. Annual production capacity is expected to reach 7.5 million batteries, which include 3 million traditional SLI lead-acid batteries as well as 4.5 million Absorbent Glass Mat batteries for automatic engine stop-start systems. The joint ventures are expected to create 737 jobs, and to generate CNY 2.55 billion in sales and CNY 292 million in profit per year. (From news releases issued by multiple sources on February 9, 2017)
Contract
-Shandong Binzhou Bohai Piston Co., Ltd. have signed an automotive parts supplier agreement with one of the Volkswagen's group companies, Scania in Sweden, to join the commercial car parts suppliers' network of the VW group. The company has begun to supply steel pistons and piston pins for Scania's new engine that meets the Euro 6 emission standards. The engine is to be used for commercial vehicles of the MAN and Scania brands. Scania joined the VW group in 2008 and became a wholly-owned subsidiary of VW in 2014. (From a press release on September 15, 2017)
-The Company was authorized development rights for Commins' 4.5L Euro-VI global project. Its plant in America verified and delivered Waukesha large bore aluminum pistons to GE. (From the Company's 2017 annual report)
Acquisition
-On March 28, 2018, Bohai Automotive Systems Co.，Ltd. announced a plan to sell stocks to raise Chinse yuan (CNY) 1.68 billion and use the fund to buy 75% shares in TriMet Automotive Holding GmbH of Germany, refinance liquid fund and make some other capital investment. TAH is one of the leading light-weighted aluminum alloy parts manufacturers in Europe. It supplies aluminum alloy engine parts as well as transmission and car body structural components to Daimler, BMW, Audi, VW, Volvo, and Magna.
Other capital investment projects are listed below:
Construction of an aluminum alloy wheel hub plant, which requires an investment of CNY 149 million and the construction work of 25 months for creating an additional capacity to produce 700,000 hubs a year.
Construction of a 6AT transmission case and new energy vehicle shock tower plant, which requires an investment of CNY 173 million and the construction work of 14 months for creating an additional capacity to produce 150,000 sets of 6AT transmission cases and 100,000 sets of shock towers a year.
Construction of a China-VI automotive piston plant, which requires an investment of CNY 484 million and the construction work of 24 months for creating an additional capacity to produce 2 million China-VI light-weighted clean energy vehicle pistons and 60,000 China-VI steal pistons a year. The project also includes the construction of a new China-VI automotive piston experiment center.
Addition of an intelligent automotive component production facilities, which requires an investment of CNY 110 million and the construction work of 24 months for making additional production facilities for critical parts. (From a corporate announcement on March 30, 2018)
-Bohai Automotive Systems Co., Ltd. said on December 15, 2017, that the company had reached an agreement with TRIMET Automotive Holding GmbH and its shareholders on a plan to acquire a 75% stake in the German company at the cost of EUR 61.50 million to make it a subsidiary of Bohai Automotive Systems. TRIMET Automotive Holding is one of the top European R&D and manufacturing companies of light-weight alloy parts and components. Its primary products are aluminum alloy engine parts, transmission parts, and body structure parts. Its main customers are Daimler, BMW, Audi, VW, Volvo, and Magna. (From a corporate announcement on December 15, 2017)
Awards
-In March, 2017, the Company received "Excellent Partner Award" from Shanghai Volkswagon Powertrain Co., Ltd. (From news issued on March 9, 2017)
R&D facility
-The Company owns a national level technical center for developing pistons. The Company established only one national technology center, National Recognized Testing Laboratory and enterprise postdoctoral working station. With the synchronized R&D, test and evaluation, the Company's many invention patents and new products reached advanced international level.
R&D Expenditure
| FY ended Dec. 31, 2017 (million CNY) |
FY ended Dec. 31, 2016 (million CNY) |
FY ended Dec. 31, 2015 (million CNY) |
|
| R&D Expenditure | 86.61 | 65.54 | 50.84 |
| Ratio of R&D expenses to operating income | 3.47 | 3.71% | 4.96% |
Capital Investment Projects for FY2017 |
(in million CNY) |
| Project | Planned amount of investment | Investment in 2017 | Project progress |
| Annual output of 8 million pistons construction project for luxury cars | 392.41 | 8.07 | 99.23% |
| Annual output of 400,000 high reinforced steel forged pistons construction project for cars | 273.66 | 45.19 | 49.81% |
| Annual output of 250,000 engine cylinder head crankshaft project | 1,379.41 | 189.20 | 57.27% |
| Annual output of 2 million pistons construction project for aluminum high-power diesel engine | 298.39 | 55.10 | 95.23% |
Domestic Investments
-Shandong Binzhou Bohai Piston Co., Ltd. said on August 31, 2017, that the company would change the headquarters of the three ongoing piston projects to Binzhou Bohai Piston Co., Ltd. without changing the project locations. The company intends to invest in these three piston projects a total of Chinese yuan (CNY) 961 million. So far, it already invested CNY 775 million. Specifically, the company plans to invest CNY 413 million in the construction of an annual production system of 8 million pistons for high-end sedans, including CNY 405 million already spent. In the development of an annual production system of 2 million aluminum alloy pistons for high-power diesel engines, it plans to invest CNY 307 million, including CNY 262 million already spent so far. (The headquarters invested CNY 228 million among the 262 million while Zibo Bohai Piston Co., Ltd. invested CNY 34 million.) In the construction of an annual production system of 0.4 million high-strength steel-forged pistons for automotive applications, it invested CNY 241 million including CNY 108 million already invested. Binzhou Bohai Piston was established in 2017 with a registered capital of CNY 900 million. It will manufacture and sell pistons and other components for automobiles, internal combustion engines, and compressors. The company will integrate assets and liabilities related to the piston business of Shandong Binzhou Bohai Piston. (From a corporate announcement on August 31, 2017)