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CITIC Heavy Industries

CITIC Heavy Industries is one of the world’s leading suppliers and service providers of heavy mining and cement equipment, and one of the largest heavy machinery manufacturers in China. The company engages in the design, manufacturing and sales of large equipment, complete technical equipment and key basic parts in the area of heavy machinery, EPC projects, robotics and intelligent equipment, energy conservation and environmental protection, new energy power equipment and others. The company’s main facilities are located in Luoyang in Henan Province, Tangshan in Hebei 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, Cemex, Heidelberg Cement, Italcementi, VALE, BHP Billiton, China Shenhua Energy, China Huaneng Group, China National Gold Group, and Conch Cement.

Year in review

CITIC Heavy Industries ended the year with revenue of RMB3,771 million, a decline of 6.2% from the year before. The company recorded a loss of RMB1,584 million, mainly due to continuous weak demand for heavy machinery and equipment from downstream industries and a decline in consolidated gross margin caused by significantly increased prices of bulk raw materials and energy. Provisions for asset impairment also dampened profit.

Sales in the construction, mining and power electronics continued to be the main revenue drivers in 2016, representing 35.3%, 19.0% and 13.36% of total revenue, respectively. The company further diversified its sources of revenue by increasing sales in new business areas such as robotics and intelligent manufacturing, energy conservation and environmental protection, as well as new energy power. Annual revenue from traditional and new businesses accounted for about 75.75% and 24.25% of total revenues, respectively. Geographically, about 40.04% of revenue came from overseas markets, representing a decrease of 2.72% over 2015.

As the weak demand that affected all heavy machinery manufacturers in 2016 is expected to continue through the foreseeable future, CITIC Heavy Industries has redoubled its efforts to streamline its business model as a core manufacturing + integrated service provider. Based on its advantages in core manufacturing, CITIC Heavy Industries has made an effort to develop a comprehensive service business. This includes the provision of an integrated industrial solution, including equipment selection, design, manufacturing and related services, which will increase the company’s competitiveness and overall profitability. To complement organic growth across these areas, CITIC Heavy Industries is exploring relevant M&A opportunities.

CITIC Heavy Industries’ robotics division expanded significantly last year, and its focus today is on the manufacture of special robots for use in high-risk environments such as fire rescue and mining solutions. CITIC Heavy Industries owns two special robot industrial facilities, i.e. Tangshan and Luoyang, making CITIC Heavy Industries the largest special robot manufacturer in China. The special robots manufactured by CITIC Heavy Industries, particularly its fire-fighting robot, have been highly recognised in the market.

In 2016, CITIC Heavy Industries continued developing the overseas and domestic markets for EPC projects. During the year, the company signed a new contract (total value: RMB957 million) with Century Peak Holdings Corp. in the Philippines for the construction of a 5,000tpd cement plant. Its Cambodia CMIC 5,000tpd Cement Line EPC Project also entered production. EPC projects in 2016 comprised about 60% of all new orders.

Research and development

CITIC Heavy Industries’ core competitive advantages are its strength in product development and unique technologies, with a technical centre in China that has the most comprehensive research facilities in the country for mining equipment. It also has an R&D centre in Australia that works closely with international customers to develop new products across the region. As of the end of 2016, CITIC Heavy Industries owned 746 registered trademarks and 202 patents in China. New products represented over 70% of total production in 2016.