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PKC Group expands its business in China and establishes a joint venture with a Chinese commercial vehicle EDS supplier

PKC Group Plc         Company Announcement 30 March 2015         08.00 am


PKC Group expands its business in China and establishes a joint venture with a
Chinese commercial vehicle EDS supplier 



PKC Group has signed a frame agreement on 28 March 2015 to establish a joint
venture with Jiangsu Huakai Wire Harness Co. Ltd. (Huakai). The joint venture
shall increase PKC's market share in medium and heavy trucks segment in China
by 8%-points and expand clientele with significant new customers. 



The joint venture shall comprise Huakai's current business. Huakai develops and
manufactures electrical distribution systems to truck, construction vehicle and
bus segments in China. The key customers are Foton (and Beijing Foton Daimler
Automotive), Kinglong and Iveco. Foton is the fourth biggest truck manufacturer
in China with 11% market share in 2014. In 2014 Huakai revenue totalled EUR 43
million with current exchange rate, profitability is at healthy level and at
the end of the year employees amounted to 680. Huakai is a private company
owned 100% by family Gu. 



The joint venture is accomplished through a new company that will be
established by Huakai in Danyang, Jiangsu province in China with an equity
value of RMB 150 million / EUR 22 million. PKC contributes RMB 150 million /
EUR 22 million via share issue to be financed from PKC's cash resources. After
the capital increase the total equity value of the joint venture is RMB 300
million / EUR 44 million and PKC owns 50% and Huakai 50%. The frame agreement
contains specific terms regarding PKC's right to consolidate. 



President & CEO Matti Hyytiäinen, PKC Group:



The joint venture with Huakai is in line with our strategy published in spring
2013. China is the world's largest commercial vehicle market and it is
forecasted to continue to grow. With the joint venture PKC's market share in
medium and heavy trucks segment in China increases by 8%-points. Chinese
government has required all trucks to comply with Euro 4 emission standard and
to have ABS brakes since the beginning 2015. Tighter emission and safety
regulation and higher end customer demands raise wire harness content and
complexity. PKC will provide the joint venture with advanced development and
manufacturing technology required to meet the new more demanding customer
demands, including the demands triggered by the Euro 5 and Euro 6 emission
standards and the electrification of commercial vehicles in the future. By
combining PKC's and Huakai's strengths we can offer competitive solutions to
Chinese commercial vehicle market. 



Vice President and main shareholder Weikai Gu, Huakai:



Huakai has grown during the last ten years and strengthened its position within
Foton and other Chinese commercial vehicle customers. At the same time the new
market regulations and end customer customisation have raised the demands from
our clientele. We believe that with the help of PKC's technology we can meet
customer expectations and grow further. In terms of new business, the joint
venture has already got preliminary acceptance to start supply engine wire
harnesses to JMC trucks. I am confident that with the help of PKC the joint
venture has capability to invest in the growth therefore meeting customers'
future needs. I should also note that I am glad to start as a CEO of the joint
venture company and to join the PKC family. 



The finalisation of the joint venture is subject to usual conditions including
e.g. negotiating the related agreements and authority approvals. The
finalisation is targeted in the latter half of year 2015, and the joint venture
will be consolidated to PKC Group as of the date of closing the deal. The joint
venture is estimated not to have a significant impact on PKC Group's 2015
result. 





PKC Group Plc



Board of Directors



Matti Hyytiäinen

President & CEO



For more information, please contact:

Matti Hyytiäinen, President & CEO, PKC Group Plc, tel. +358 (0)400 710 968



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 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
2014 totalled EUR 829.2 million. PKC Group Plc is listed on Nasdaq Helsinki.