Weichai Power 2025 Annual Report Analysis: Financial Expenses Drop by 296.76%, Non-Recurring Net Profit Decreases by 8.22%

Core Profitability Indicators Analysis

Operating Revenue: Up 7.47% Year-over-Year, Strong Domestic Growth

In 2025, Weichai Power achieved operating revenue of 231.809 billion yuan, a 7.47% increase year-over-year. Regionally, domestic revenue reached 108.926 billion yuan, a 13.56% surge, far exceeding the 2.60% growth of overseas business, becoming the main driver of revenue growth. By business segment, powertrains, complete vehicles, and key components generated 100.411 billion yuan, up 11.84%, maintaining steady growth.

Net Profit: Slight Decrease of 4.15%, Non-Recurring Gains Boost Performance

Net profit attributable to shareholders of the listed company was 10.931 billion yuan, down 4.15% year-over-year; net profit excluding non-recurring gains and losses was 9.662 billion yuan, a decline of 8.22%, mainly due to expenses related to the KION efficiency plan by subsidiaries. During the same period, non-recurring gains and losses reached 1.269 billion yuan, up 44.85%, partially offsetting the decline in core profitability.

Earnings Per Share: Basic EPS Down to 1.27 Yuan

Basic earnings per share (EPS) was 1.27 yuan, a decrease of 3.05% year-over-year; non-recurring EPS was 1.11 yuan, down 8.33%, consistent with profit trends, indicating a slight decline in profitability.

In-Depth Expense Structure Analysis

Total Expenses: Up 7.58% YoY, Management Expenses Significantly Rise

In 2025, total expenses (sales + management + financial + R&D) amounted to 3.345 billion yuan, up 7.58%. Management expenses increased sharply by 16.97% to 1.2001 billion yuan, becoming the main contributor to expense growth, mainly due to expenses related to the KION efficiency plan by subsidiaries.

Selling Expenses: Grow in Line with Revenue

Selling expenses reached 1.3621 billion yuan, up 9.10%, slightly below revenue growth, indicating initial success in cost control, mainly due to increased sales channels and after-sales service costs driven by revenue expansion.

Financial Expenses: Exchange Gains Turn Losses into Profits

Financial expenses were -0.454 billion yuan, a significant decrease of 296.76%, shifting from net expenditure to net income, mainly due to exchange gains and losses changes. The company effectively hedged exchange rate risks through derivatives trading.

R&D Expenses: Stable Investment Scale

R&D expenses were 0.8284 billion yuan, a slight decrease of 0.18%, maintaining stable investment, reflecting ongoing emphasis on technological development. During the reporting period, the company applied for 1,323 patents, received 1,488 patents, and won 22 provincial or ministerial-level science and technology awards, including the Grand Prize of Mechanical Industry Science and Technology Award.

R&D Team and Innovation Capacity

R&D Staff: Up 9.85% YoY, Structure Continues Optimization

As of the end of 2025, the total R&D staff reached 19,318, an increase of 9.85%. The proportion of R&D personnel in total employees rose from 18.08% to 19.04%. Among them, master’s degree or above R&D personnel numbered 6,735, up 12.48%, further increasing high-education talent proportion. Age-wise, those over 40 accounted for an 18.45% increase, indicating a well-established senior R&D team.

Cash Flow and Capital Operations

Overall Cash Flow: Net Outflow Narrows

In 2025, net decrease in cash and cash equivalents was 5.838 billion yuan, a reduction of 64.97% compared to the previous year’s outflow of 16.666 billion yuan, mainly due to improved operating cash flow and increased maturity of financial products.

Operating Cash Flow: Up 9.92%, Improved Profitability

Net cash from operating activities was 2.8682 billion yuan, up 9.92%, mainly due to increased cash receipts from sales and effective cost control, further strengthening core cash-generating ability.

Investing Cash Flow: Reduced Outflows

Net cash used in investing activities was -1.6628 billion yuan, a decrease of 1.2283 billion yuan, mainly due to increased cash recovered from maturing financial products, slowing investment pace.

Financing Cash Flow: Larger Outflows

Net cash used in financing activities was -1.832 billion yuan, an increase of 448.2 million yuan, mainly due to debt repayments and bond issuance, indicating rising debt repayment pressure.

Risk Factors

Industry Competition Risks

Intensified competition in commercial vehicles and construction machinery sectors, with leading companies increasing R&D and market expansion. If the company cannot continuously launch competitive products, market share may decline.

Raw Material Price Fluctuation Risks

Volatility in steel, non-ferrous metals, and other raw material prices could significantly raise production costs, squeezing profit margins if prices rise sharply.

International Business Risks

Over 50% of revenue comes from overseas. Geopolitical conflicts, exchange rate fluctuations, and trade policy changes could adversely affect international operations. In 2025, overseas revenue growth slowed to 2.60%, showing signs of sluggishness.

Technology Iteration Risks

Rapid development of new energy and intelligent technologies requires timely adaptation. Failure to keep pace may lead to technological lag and weaken long-term competitiveness.

Executive Compensation

Chairman: No Compensation Drawn from the Company

Chairman Ma Changhai received no pre-tax remuneration from the company during the reporting period; his compensation mainly comes from affiliated Shandong Heavy Industry Group Co., Ltd.

CEO: 2.2352 Million Yuan

CEO Wang Decheng’s pre-tax remuneration was 2.2352 million yuan, among the highest in the executive team, linked to company performance.

Vice Presidents: Range 1.538-1.686 Million Yuan

Vice presidents’ total pre-tax compensation ranged from 1.538 to 1.686 million yuan, with Gu Shenggang earning the highest at 1.686 million, and Cheng Guangxu the lowest at 1.538 million. Overall, compensation levels are consistent with industry standards.

CFO: 1.6516 Million Yuan

CFO Wang Cuiping’s pre-tax remuneration was 1.6516 million yuan, aligning with the role’s compensation level.

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