Achieves Satisfactory Results with Strong Resilience
HONG KONG SAR - Media OutReach - 9 March 2023 - Impro Precision Industries Limited ("Impro " or the "Group") (Stock Code: 1286), a world-leading manufacturer of high-precision, high-complexity, and mission-critical components, today announced its annual results for the year ended 31 December 2022.
In 2022, the Group vigorously developed and recorded stable revenue growth in the aerospace, medical, energy, and diversified industrial end markets. The Group's revenue for the year amounted to HK$4,354.7 million, representing an increase of 15.3% compared with last year. Profit attributable to shareholders of the Company was HK$582.0 million, an increase of 52.0% over 2021. Adjusted profit attributable to shareholders of the Company amounted to HK$649.1 million, a year-on-year increase of 53.7%, and adjusted basic earnings per share were 34.5 HK cents. In lieu of the distribution of the final dividend, the Group resolved to declare a second 2022 interim dividend of 8.0 HK cents per share. Together with the first 2022 interim dividend of 8.0 HK cents per share already paid, the dividend for the year amounted to 16.0 HK cents per share, representing an increase of 58.4% when compared with 10.1 HK cents per share last year.
During the year, revenue from the aerospace, medical, and energy end markets increased significantly by 53.6% to HK$515.8 million. The increase was mainly attributable to the recovery of the aerospace market following the lifting of quarantine restrictions for international visitors entering certain countries in Europe, the US, and Asia, as well as the Group's efforts to jointly develop a large number of new SKUs with its customers in the aerospace end market over the past two years, which helped customers solve supply chain shortages. As a result, revenue from the aerospace business increased 52.8% year-on-year to HK$290.9 million. The medical end market benefited from increased demand for different medical equipment, driving its sales revenue up 32.1% to HK$152.4 million. Higher global energy prices and the Group's acquisition of Foshan Ameriforge in August 2022 drove significant sales growth in the energy end market, with sales revenue climbing 141.7% year-on-year to HK$72.5 million.
The Group's diversified industrial end markets also performed well, with revenue up 24.5% year-on-year to HK$2,139.4 million. In particular, increased investment in infrastructure projects and other economic stimulus policies introduced by the US government supported the demand for high horsepower engines, with revenue from this segment rising 38.1% year-on-year to HK$463.1 million. New product development and increased market share drove sales in the recreational boats and vehicles end market up 31.2% to HK$248.2 million. Revenue from the agricultural equipment end market increased by 29.1% to HK$353.3 million, while the commercial vehicle end market also benefited from growing demand in the US and Europe, driving its sales revenue up by 18.7% during the year.
Amid the complex and volatile business environment in 2022, lmpro's visionary "Global Footprint", "Diversified End Markets" and "Twin Growth Engine" strategies enabled it to combat geographical risks and effectively hedge against cycles and volatility in different end markets, resulting in considerable growth in business results during the year. The investment casting plant, the third plant at the Mexico SLP campus, officially commenced operation in November 2022. Together with the precision machining plant and sand casting plant, which began operation in 2021, the campus is increasingly crucial to the Group's global production capacity. Construction and installation of machinery and equipment are also underway at the remaining aerospace component and surface treatment plants, which are expected to begin trial production and obtain aerospace system certification in 2023. In addition to optimizing its production footprint in Asia, Europe and the US, the Group also actively implemented its "Region for Region Manufacturing" and "Dual Source Production" strategies, which can effectively reduce potential supply chain and tariff risks faced by its customers due to geopolitics and continue to help the Group expand its market share in North America.
The gradual reopening of borders around the world last year and the significant relaxation of travel restrictions in the PRC in early 2023 point to a full recovery of the international aerospace market. The Group expects sales in the aerospace end market to continue to experience strong growth between 2023 and 2024. Amid the pandemic, the Group has been actively planning forward-looking deployment in the aerospace sector. It established the "Aerotek Business Unit" and completed the acquisition of Foshan Ameriforge Manufacturing Technology Co., Ltd which focuses on high-precision, high-complexity critical components for end markets such as commercial aircraft. These have allowed the Group to realize synergies with its existing businesses in areas such as sales network and supply chain management while consolidating its strengths in the aerospace end market.
The Group is also committed to deploying a diversified range of industrial end markets. Factors such as soaring global energy prices and increased infrastructure investment by the US government have supported strong growth in the high horsepower engine, agricultural equipment and construction equipment end markets. During the year, the Group acquired the hydraulic orbital motor business of Danfoss Jiangsu to further expand its hydraulic component and system business. In addition, with the increasingly stringent requirements for emission reduction in commercial vehicles in various countries and the future development of hydrogen energy commercial vehicles, the Group will be presented with ample market opportunities. Therefore, the Group will continue to concentrate its resources on the development of the commercial vehicle end market in order to reduce the impact of passenger vehicle electrification.
Looking ahead, despite the fading impact of COVID-19, the overall global economic environment, particularly in Europe and the US, will continue to face considerable downward pressure. Uncertainties such as high inflation and geopolitics will continue to affect macroeconomic growth, and the ongoing tight supply chains will continue to put considerable pressure on the Group. However, through the implementation of its "Global Footprint" and "Diversified End Markets" strategies, the Group has been able to effectively mitigate the impact of related risks. Coupled with the Mexico SLP campus, which has further strengthened the Group's global production footprint, the Group remains cautiously optimistic about its business prospects. As of February 28, 2023, the Group's total undelivered orders on hand for the next 12 months amounted to HK$3,980 million, an increase of 6.2% year-on-year. As the new acquisitions of the Group in 2022 are mainly from domestic customers, which have a different order cycle than overseas customers, which is, generally shorter, the management is still confident that the sales growth will be maintained in 2023.
Mr. Lu Ruibo, Chairman and Chief Executive Officer of Impro, said, "Looking ahead, the Group will continue to capitalise on its unique strengths of "Global Footprint" and "Diversified End-markets" by leveraging its global manufacturing and sales network in Asia, Europe and the United States, and will actively expand into aerospace area and diversified industrials end-market and respond to the cycles and volatility of the global market with unique and superior resilience. Meanwhile, the Group will continue to expand its production capacity and implement the strategy of "Twin Growth Engine", as well as seek for suitable acquisition targets. The Group will continue to enhance its research and development capabilities and keep focusing on high-precision, high-complexity and mission critical components and hydraulic systems, in order to provide customers with high-quality, unique and globalized products and services, thereby continuously strengthening the Group's leading position in the industry and securing sustainable value growth for our shareholders."
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About Impro Precision Industries Limited (Stock Code: 1286)
Impro Precision Industries Limited was established in Wuxi, China in 1998 and its headquarters was moved to Hong Kong, China in 2011. It is a global top-ten manufacturer of high-precision, high-complexity and mission-critical casting, machined components and hydraulic orbital motors for diversified end markets. According to market research, Impro Precision was the world's sixth-largest independent and China's largest investment casting manufacturer and also the world's fourth-largest precision machining company in the end markets of automotive, aerospace and hydraulics, each in terms of total revenue in 2021. The Group is also one of the few domestic suppliers offering one-stop solutions, including initial research and development, tooling design and manufacturing, casting, heat treatment, secondary machining and surface treatment. Impro Precision has established a global manufacturing layout and comprehensive service network. It has 21 production facilities in China, Germany, Turkey, the Czech Republic and Mexico, which are supported by 9 sales offices in China, the US, Luxembourg, Turkey, Germany, Mexico and Hong Kong, as well as warehousing capacities in China, North America, Luxembourg, Mexico, Germany and Turkey. Impro Precision has established long-term strategic cooperative relationships with a number of globally recognized industry leaders, selling its products in more than 30 countries and regions.
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