PKC Group makes a major breakthrough in China by establishing a joint venture with JAC


PKC Group Plc         Company Announcement 29 March 2016         11.10 am

 

 

PKC Group makes a major breakthrough in China by establishing a joint venture with JAC

 

PKC Group has today signed a joint venture contract with Anhui Jianghuai Automobile Co., Ltd's (JAC) subsidiary Hefei Jianghuai Automobile Co., Ltd (Hefei JAC). The joint venture shall increase PKC's market share in in China in both medium and heavy duty truck segments by 5 percentage points and expand business to buses, light trucks, vans, pick –up trucks and various other light vehicles.

 

The joint venture (JV) shall comprise current wiring harness business of JAC group with the aim to gradually take-over also other, currently outsourced, wiring systems business. JAC’s current wiring harness buy is appr. RMB 1000 million p.a. (appr. EUR 140 million p.a. at current exchange rate). The parties’ aim is to develop JV as a primary supplier for all wiring harnesses to JAC group. The joint venture will deliver full design & development, manufacturing and sequence delivery services to JAC group companies.

 

JAC’s total sales in 2015 consisted of 588 thousand vehicles and revenue of RMB 47 billion (appr. EUR 6.5 billion at current exchange rate).

 

The 50/50 joint venture is accomplished through a new company that will be established by Hefei JAC and PKC in city of Hefei in Anhui province in China with an equity value of RMB 100 million (EUR 14 million at current exchange rate). PKC contributes RMB 50 million (EUR 7 million at current exchange rate) via equity to be financed from PKC's cash resources. The JV agreement contains specific terms regarding PKC's right to consolidate.

 

President & CEO Matti Hyytiäinen, PKC Group:

 

We are extremely proud to team up with JAC, which is a one of the leading Chinese automobile OEMs. This expansion in China is a major breakthrough for PKC and logical continuity to our strategy published in spring 2013. PKC’s market position in China will increase significantly.

 

JAC is investing heavily to vehicle development and they have clear strategy how to connect leading global expertize from different disciplines in to their vehicle designs. By utilizing PKC's knowhow, JAC can focus on their core activities and further capture growth opportunities in China and global markets.

 

Chairman of Board An Jin, Anhui Jianghuai Automobile Co., Ltd.:

 

JAC has set a target to gain more market share by meeting various end market requirements. In order to reach these targets, JAC will invest in improved quality and performance of our vehicles. More features are added to vehicles and thus electrical system becomes more complicated and critical. We are very glad to team up with PKC which brings us world class knowledge on electrical distribution systems.

 

 

The finalization of the joint venture is subject to usual conditions including e.g. negotiating
 the related agreements and obtaining authority approvals. The finalization is targeted in the 
second half of 2016, and the joint venture will be consolidated to PKC Group as of the date of 
starting the operations. The joint venture is estimated to generate approximately RMB 350 
million (appr. EUR 50 million at current exchange rate) revenue and employ about 1000 people 
in its first 12 months of operation. The joint venture is estimated not to have a significant 
impact yet on PKC Group's 2016 result. 

 

PKC Group Plc

Board of Directors

 

Matti Hyytiäinen

President & CEO

 

For additional information, contact today at 11-15 Finnish time:

Matti Hyytiäinen, President & CEO, PKC Group Plc, tel. +852 550 788 26

 

A separate presentation is available at PKC Group's website at www.pkcgroup.com

 

Distribution

Nasdaq Helsinki

Main media

www.pkcgroup.com

 

PKC Group is a global partner, designing, manufacturing and integrating electrical distribution systems, electronics and related architecture components for the commercial vehicle industry, rolling stock manufacturers and other selected segments. The Group has production facilities in Brazil, China, Estonia, Finland, Germany, Lithuania, Mexico, Poland, Russia, Serbia and the USA. The Group's revenue in 2015 totalled EUR 908.0 million. PKC Group Plc is listed on Nasdaq Helsinki.