Extracted from Annual Report 2021
Determination and commitment in the pursuit of one’s goals will lead the road to success.
FY2021 was a challenging year marked by the global pandemic. Despite the major disruptions in the market, Group revenue for FY2021 grew by 6.8% to RMB1,028.0 million from RMB962.4 million in FY2020. Yongmao, which operates in the construction sector was directly hit by the pandemic with our major operating segments experiencing total lockdown in the first half of the year 2020. However, the PRC had a comparatively quick recovery from the COVID-19 pandemic with the effort of strict containment measures along with strong government support which led to an upsurge of activity in the second half of FY2021 and resulted in revenue contribution from the country to grow by 31.9% to RMB601.9 million. It forms 58.5% of the Group’s total revenue.
The Group also saw higher contribution from the USA & Europe markets which increased from RMB28.4 million to RMB58.2 million. This was due in part to our sale to Russia where our cranes are used in one of Russia’s largest modern shipbuilding and engineering complex, the Zvezda shipyard. On the other reporting segment, revenue from Asia (outside the PRC) and Middle East & Others softened by 22.3% and 27.0% respectively.
In line with topline growth, the Group’s gross profit improved by 2.5% to RMB255.0 million in FY2021 from RMB248.8 million in FY2020. However, our average gross profit margin narrowed to 24.8% for FY2021 as compared to 25.9% in FY2020. The factors behind the decrease are the lower average selling price due to price sensitivity and softer market conditions in the earlier part of the financial year. Furthermore, the lower production activities in 1H FY2021 also resulted in higher production overheads to be absorbed. Lastly, margins were squeezed by an increase in steel prices in 2H FY2021.
The Group reported a net profit attributable to equity holders amounting to RMB54.9 million for FY2021, a decrease from RMB59.7 million in FY2020.
Unwavering Focus on Quality
For the year under review, as we adapted to the new normal of observing safe distancing measures and additional hygiene practices, we have equally upheld the importance of the quality of our work. Despite facing tighter schedules in the second half of FY2021 where delayed and new orders required a redoubling of effort, we continued to uphold our stringent quality assurance to our customers.
Yongmao’s unceasing pursuit of quality in FY2021 has led to the development of a slew of new cranes. Our research and development (“R&D”) team again delivered by leveraging on experience gained from designing and building earlier models to launch the STT1530, STL760, STT603 and STT323. These are in additions to the launch of the STL4200, which is our largest luffing tower crane to date as mentioned in our Chairman’s message. These new models further complement our range of products with additional options that translates into a more comprehensive product range for client selection.
A key to our success in improving our quality is our long-term strategy of standardisation which allows us to consistently apply the best components, process and solutions in our latest designs. Putting our leading-edge techniques to the fore allows us to promote innovation as the interchangeability strategy translates to efficiencies that place greater focus on identifying and developing solutions. Standardisation also facilitates after-sales service as repairs and maintenance are more efficiently undertaken and leading to greater customer satisfaction and trust in our products, services and systems. In fact, customer satisfaction for the year has improved, with complaints decreasing by 32 percentage points compared with the same period.
Other advancements to our internal process for the year include further progress in making internal communications paperless. This is part of an ongoing initiative which saw the further implementation of Solidworks/Computer-Aided Design (CAD) to accelerate product development and raise precision and quality standards. The programme also to include an overhaul of our Product Data Management (PDM) systems which had the end goal of Yongmao to become fully paperless which would result in a better in-house approval system, cost savings and better security of Yongmao’s intellectual property.
During the financial year, quality management system review experts were invited to conduct courses for staff to further instil the importance of delivering a high-quality product. The experts shared in-depth technical and key rationales to build staff understanding and motivation that every individual contributes to the sustainability and growth of Yongmao.
At Yongmao, we believe that it is our uncompromising focus on quality that has brought the brand further. The abovementioned sale of tower cranes to the Zvezda shipyard in Russia is a testament of us extending our reach and strengthening our position in the tower crane manufacturing industry. Such achievements were built on the back of an unwavering focus on ramping up quality and cementing our position in the industry. To-date, we have obtained various international certification including from Europe, Korea, Singapore, Russia and the United States and our cranes are sold in more than 80 countries and regions around the world.
Underpinning our advancements in quality are the efforts of the R&D team. The team is staffed by talented and dedicated individuals that push the limits of our industry. As we step towards the future, refining existing products and processes along with developing new offerings to market will be a cornerstone for our strategy ahead.
Upholding Health & Safety
The COVID-19 pandemic continues to impact economies, businesses and daily lives across the globe. At Yongmao, in addition with our focus on strengthening quality of product and service, the well-being of each member of the Group is also of utmost importance to us. In FY2021, we continued to build upon the best practices established in the previous year.
The contingency and safety committee established in FY2020 continued to ensure adherence to measures to control virus transmission while maintaining production efficiency and quality across our operational processes. Our staff were supplied with a steady supply of personal protective equipment and measures such as disinfection, safe distancing, flexible working arrangements, contact tracing and temperature-taking were overseen by safety officers and team leaders.
In the coming financial year, we will remain vigilant and do our bit in fighting against the spread of the virus as new strains and other developments may require swift responses to curb transmission while maintaining production efficiency and quality.
The COVID-19 pandemic has put our resolve and capabilities to the test and our performance in FY2021 is a testament to our success. It is also a reassurance for customers, employees and stakeholders of Yongmao’s resilience and will be a key point of consideration for the present and future.
Moving forward, we foresee that demand will gradually recover but in a lumpy manner as the COVID-19 pandemic continues to affect the economies of our markets. New variants of the virus and sudden surges in infections may translate to new rounds of lockdowns which may hamper projected recoveries.
Nonetheless, we will remain alert to the changing conditions and adapt accordingly to ensure employee safety and business continuity. Research and development of new models of tower cranes will continue to be at the forefront of our strategy.
In closing, I like to thank our staff for their efforts in overcoming the challenges of FY2021 which included meeting compressed deadlines while observing safe distancing and hygiene measures. I also like to thank our shareholders for their ongoing support and remind all to take care and stay safe.
Tian Ruo Nan
Chief Executive Officer