Ek Chor China Motorcycle Co. Ltd., Announces 1997 Mid-Year Results
15 September 1997Ek Chor China Motorcycle Co. Ltd., Announces 1997 Mid-Year Results
HONG KONG, Sept. 15 -- Ek Chor China Motorcycle Co. Ltd. ("Ek Chor China" or the "Company"), today announced its results for the six months ended June 30, 1997. Highlights -- Net loss - RMB4.0 million (US$0.5 million)(1996: net income of RMB27.2 million). -- Loss per share - RMB0.23 (US$0.03)(1996: earnings per share of RMB1.59). -- Share of net income of joint ventures - RMB1.8 million (US$0.22 million)(1996: RMB31.5 million). -- Total motorcycle unit sales - 273,474 units (1996: 292,983 units). Overview Ek Chor China again encountered a difficult market environment in the PRC in the first half of 1997. Our two motorcycle manufacturing joint ventures were materially affected by intense competition as a result of a significant market oversupply of motorcycles during the period and increases in operating costs of our two motorcycle manufacturing joint ventures. Nevertheless, the performance of our parts manufacturing ventures was satisfactory. Shanghai Machinery and Deni Carburetor were each able to register gains in net income on the back of increases in unit sales of air conditioner compressors of 6.1% and carburetors of 26.3%, respectively. We expect a continuation of the difficult trading conditions. However, by continuing our focus on improving cost control and other efficiencies, we look forward to a very gradual improvement in performance. Brief review of six months ended June 30, 1997 results of the Company's existing ventures -- Shanghai-Ek Chor Motorcycle Company Limited ("Shanghai Motorcycle") Shanghai Motorcycle sold 104,585 units of 90cc model motorcycles and 55,864 units of 125cc model motorcycles during the first six months of 1997. Net sales for the period increased 31.5%, from RMB688.7 million in 1996 to RMB905.3 million (US$109.1 million) primarily due to a 44.6% increase in unit sales. Operating loss increased 183.6% from RMB5.5 million in 1996 to RMB15.6 million (US$1.9 million) in 1997. Shanghai Motorcycle incurred a net loss for the period of RMB70.7 million (US$8.5 million) (1996: RMB35.4 million). The Company owns an effective 50% interest in Shanghai Motorcycle. -- Luoyang Northern Ek Chor Motorcycle Company Limited ("Luoyang Motorcycle") Luoyang Motorcycle recorded net sales of RMB528.4 million (US$63.7 million) in the period, a decrease of 36.6% over the same period last year. Net loss for the period was RMB1.7 million (US$0.2 million) as compared to a net income of RMB47.1 million in 1996. Luoyang Motorcycle's total unit sales were 101,371 units for the period, a decrease of 41.7% over the comparable period last year. Unit sales of the 70cc model, 90cc model and 100cc model were 5,706 units, 58,619 units and 22,182 units respectively, an increase of 76.9%, and decreases of 54.6% and 12.7% respectively over 1996. The Company owns an effective 55% interest in Luoyang Motorcycle. -- Shanghai-Ek Chor General Machinery Co., Ltd. ("Shanghai Machinery") Shanghai Machinery posted very satisfactory results in the first six months of 1997. Total sales for the period were RMB532.5 million (US$64.2 million), an increase of 19.3% over the comparable period last year. Net income was RMB77.3 million (US$9.3 million), an increase of 42.4% over last year (1996: RMB54.3 million). Shanghai Machinery sold 174,632 automotive air conditioner compressors, 367,267 motorcycle front fork assemblies and 505,774 rear fork assemblies during the first six months of 1997, increases of 6.1%, 18.8% and 58.0% respectively, over the comparable period last year. The Company owns an effective 50% interest in Shanghai Machinery. -- Zhan Jiang Deni Carburetor Co. Ltd. ("Deni Carburetor") Deni Carburetor reported very satisfactory results in its fifth year of operation. Sales for the first six months of 1997 were RMB147.2 million (US$17.7 million), compared to RMB97.2 million in the comparable period last year, an increase of 51.4%. Deni Carburetor's net profit during the first half of 1997 increased 174.8%, to RMB29.4 million (US$3.5 million), compared to RMB10.7 million during the comparable period last year. Deni Carburetor sold 99,821 automotive carburetors, an increase of 20.5% from last year, 378,340 motorcycle carburetors were sold during the first six months of 1997, an increase of 27.9% from the comparable period in 1996. The Company owns an effective 28% interest in Deni Carburetor. -- Shanghai Ek Chor Nissei Co., Ltd. ("Shanghai Nissei") At present, Shanghai Nissei manufactures speedometers, tachometers and other component parts for motorcycles. Shanghai Nissei incurred a loss of RMB4.4 million (US$0.5 million) for the period which was in line with the Company's expectations. The Company owns an effective 34% interest in Shanghai Nissei. Dividends The Board of Directors has decided not to declare any dividend in respect of the six months ended June 30, 1997 (1996: US$0.05 per share). Exchange Rate Note: Certain amounts herein have been translated from Renminbi ("RMB"), the legal tender currency in the PRC, into U.S. dollars ("US$") solely for the convenience of the reader, using the unified exchange rate as quoted by the People's Bank of China of RMB8.3 = US$1.0. No representation is made that RMB could have been, or could be, converted into US$ at that rate or any other rate, or at all. Ek Chor China is a Bermuda incorporated holding company which owns interests in and actively manages sino-foreign joint ventures in the PRC. These ventures are engaged in the design, manufacture and sale of motorcycles and motorcycle parts and components, automotive air conditioner compressors and carburetors, and certain other automotive instrumentation parts and components. The Company's common shares are listed on the New York Stock Exchange. Key financial highlights for the six months ended June 30: (All figures in RMB million, except per share figures which are in RMB) 1996 1997 The Company Share of net income of joint ventures 31.5 1.8 Income/(Loss) before income taxes and minority interests 26.6 (4.0) Net income/(loss) 27.2 (4.0) Earnings/(Loss) per share 1.59 (0.23) Shanghai Motorcycle Net sales 688.7 905.3 Operating loss (5.5) (15.6) Loss before income taxes (35.4) (70.7) Net loss (35.4) (70.7) Luoyang Motorcycle Net sales 833.2 528.4 Operating income 68.4 18.4 Income/(Loss) before income taxes 51.1 (1.5) Net income/(loss) 47.1 (1.7) Shanghai Machinery Net sales 446.4 532.5 Operating income 78.4 103.1 Income before income taxes 65.6 92.3 Net income 54.3 77.3 Deni Carburetor Net sales 97.2 147.2 Operating income 14.2 33.2 Income before income taxes 10.7 29.4 Net income 10.7 29.4 First Six Months' Unit Sales 1996 1997 % change Shanghai Motorcycle 50cc model -- 1,920 N/A 90cc model -- 104,585 N/A 125cc model 58,989 55,864 (5.3) 150cc model 901 2,569 185.1 250cc model 59,168 7,165 (87.9) Total 119,058 172,103 44.6 Luoyang Motorcycle 36cc model 1,620 357 (78.0) 50cc model 14,583 12,813 (12.1) 70cc model 3,225 5,706 76.9 90cc model 129,096 58,619 (54.6) 100cc model 25,401 22,182 (12.7) 125cc model -- 908 N/A 150cc model -- 786 N/A Total 173,925 101,371 (41.7) Shanghai Machinery Air conditioner compressors 164,538 174,632 6.1 Front fork assemblies 309,076 367,267 18.8 Rear fork assemblies 320,158 505,774 58.0 Deni Carburetor Motorcycle carburetors 295,878 378,340 27.9 Automotive carburetors 82,860 99,821 20.5 SOURCE Ek Chor China Motorcycle Co. Ltd.