China Yuchai International Limited Announces Satisfactory Performance for Q2 2004
SINGAPORE--Aug. 11, 2004--China Yuchai International Limited (CYI) today announced satisfactory performance for the three months ended June 30, 2004 with net income of Rmb98.9 million (US$12.0 million), despite the effects of the cooling down measures implemented by the Chinese government, as compared to net income of Rmb124.9 million (US$15.1 million) for the same period in 2003.Net sales of Rmb1,149.6 million (US$138.9 million) for the three months ended June 30, 2004 represents a slight decrease of 1.5% compared to same period last year of Rmb1,166.8 million (US$141.0 million). Total unit sales of 40,922 diesel engines for the quarter ended June 30, 2004 was 5% lower than the same period last year of 43,041 diesel engines.
Net sales of Rmb2,726.7 million (US$329.4 million) for the six months ended June 30, 2004 represents an increase of approximately 14.9% compared to Rmb2,373.9 million (US$286.8 million) for the same period last year. Total unit sales of 105,323 diesel engines for the six months ended June 30, 2004 was approximately 10.6% higher than the same period last year of 94,931 diesel engines. This was due mainly to the strong unit sales in the first quarter ended March 31, 2004 arising from higher unit sales of Yuchai's 6108 medium, 4-series light-duty diesel and industrial engines.
The overall gross margin of 31.0% for the six months ended June 30, 2004 was 1.4% higher than the 29.6% gross margin of the same period last year mainly due to product sales mix and production efficiency.
For the six months ended June 30, 2004, selling, general and administrative expenses increased by approximately 13.4% due mainly to higher staff costs, transport charges and loss on disposal of certain obsolete equipment.
For the period ended June 30, 2004, trade account receivables and inventories increased as a result of higher sales volume and normal seasonality factors. Cash balances have decreased and bank borrowings have increased for the period ended June 30, 2004 mainly due to increased capital expenditure payments made during the six months ended June 30, 2004. Amount due from a related company as of June 30, 2004 of Rmb202.9 million (US$24.5 million) relates to advance payments made for a new logistics company, which is controlled by local Chinese stakeholders in Guangxi Yuchai Machinery Company Limited.
Basic and diluted net income per share for the six months ended June 30, 2004 was Rmb8.32 (US$1.01) compared to a basic and diluted net income per share of Rmb6.86 (US$0.83) for the same period in 2003.
Government industry statistics show that in the first half of 2004, there was an increase of approximately 18% in sales of trucks and buses in China compared to same period last year. Demand for new trucks and buses would likely have been higher if not for the stricter enforcement of the Road Traffic legislation which commenced in May 20, 200404, with heavy fines on overloading and non-compliance to vehicle standard specifications such as vehicle weight and length. We believe that demand for new trucks was held back as potential buyers preferred to wait and see how persistent the government authorities will be in enforcing the Road Traffic Act regulations. We believe that this situation also led to an increase in freight rates and potential truck buyers appear to be adopting a "wait-and-see" attitude before making their buying decisions.
According to the China Economic Information Network, owned by the Beijing National Development and Reform Commission, the cooling down measures have been far more effective than initially expected. This will enable the Beijing government to moderate its growth target in 2004.
Mr Wrixon F. Gasteen, President and Director stated that "the good profit performance for the six months ended June 30, 2004 was achieved due mainly to the strong unit sales recorded in the first quarter of 2004 and despite the impact in Q2 2004 arising from the cooling down measures implemented by the Chinese government. Despite the impact of the stricter enforcement of the Road Traffic regulations and the tightening of bank lending policies on financing of new vehicles, Yuchai was able to achieve net income growth of approximately 21.2% for the six months ended June 30, 2004 compared to same period last year. We expect that the market demand for diesel engines in China will remain strong with the ongoing expansion of new highways and tolls in China which will lead to increased demand for trucks and buses in China. We believe that the Company, as one of the top three manufacturers of diesel engines in China, will be able to take advantage of this growth demand."
General Information
Yuchai has a strong brand name in China with an extensive sales and marketing network. Yuchai's products are of good quality and provide reliable performance. Yuchai has established itself as a major manufacturer of diesel engines in China with a significant market share.
CYI has filed with the U.S. Securities and Exchange Commission a copy of this press release on Form 6-K. A copy of such filing has also been sent to The New York Stock Exchange. Reference is made to such filing for cautionary statements which identify factors that could affect the forward looking statements contained in this press release.
China Yuchai International Limited
Executive Office
16 Raffles Quay
#26-00 Hong Leong Building
Singapore 048581
Tel: (65) 6220 8411
Fax: (65) 6226 0502
Contact persons: Mr Wrixon F. Gasteen, President
Mr Philip Ting, Chief Financial Officer and Director
Note 1: The Company's functional and reporting currency is Renminbi,
the translation of amounts from Renminbi to U.S. dollars is solely for
the convenience of the reader. Translation of amounts from Renminbi to
U.S. dollars has been made at the rate of Rmb 8.2766 = US$1.00, the
rate quoted by the People's Bank of China at the close of business on
June 30, 2004. No representation is made that the Renminbi amounts
could have been, or could be, converted into U.S. dollars at that rate
or at any other certain rate on June 30, 2004 or at any other date.
Note 2: All financial data (both in Renminbi and U.S. dollars) is
unaudited.
CHINA YUCHAI INTERNATIONAL LIMITED
UNAUDITED CONSOLIDATED INCOME STATEMENTS
For the period ended June 30, 2004
(RMB and US$ amounts expressed in thousands, except per share data)
For Quarter ended June 30,
------------------------------
2003 2004 2004
---------- ---------- --------
Rmb'000 Rmb'000 US$'000
Net sales 1,166,806 1,149,587 138,896
Cost of goods sold 885,806 814,105 98,362
---------- ---------- --------
Gross profit 281,000 335,482 40,534
Research and development cost (6,306) 30,904 3,734
Selling, general and administrative
expenses 88,196 144,609 17,472
---------- ---------- --------
Operating income 199,110 159,969 19,328
Finance cost 4,606 7,863 950
Other net income (6,964) (5,300) (640)
---------- ---------- --------
Income before income taxes and
minority interests 201,468 157,406 19,018
Income tax expense 33,289 26,751 3,232
---------- ---------- --------
Income before minority interests 168,179 130,655 15,786
Minority interests in income of
consolidated subsidiaries 43,266 31,744 3,835
---------- ---------- --------
Net income 124,913 98,911 11,951
========== ========== ========
Net income attributable to common Rmb Rmb US$
shares
Basic and diluted 3.53 2.80 0.34
========== ========== ========
For six months ended June 30,
------------------------------
2003 2004 2004
---------- ---------- --------
Rmb'000 Rmb'000 US$'000
Net sales 2,373,961 2,726,732 329,451
Cost of goods sold 1,671,339 1,881,895 227,376
---------- ---------- --------
Gross profit 702,622 844,837 102,075
Research and development cost 30,009 56,369 6,811
Selling, general and administrative
expenses 285,948 324,195 39,169
---------- ---------- --------
Operating income 386,665 464,273 56,095
Finance cost 10,164 13,807 1,668
Other net income (6,964) (5,880) (710)
---------- ---------- --------
Income before income taxes and
minority interests 383,465 456,346 55,137
Income tax expense 61,236 69,744 8,427
---------- ---------- --------
Income before minority interests 322,229 386,602 46,710
Minority interests in income of
consolidated subsidiaries 79,698 92,632 11,192
---------- ---------- --------
Net income 242,531 293,970 35,518
========== ========== ========
Net income attributable to common Rmb Rmb US$
shares
Basic and diluted 6.86 8.32 1.01
========== ========== ========
Note: The Company's functional and reporting currency is Renminbi, the
translation of amounts from Renminbi to U.S. dollars is solely for the
convenience of the reader. Translation of amounts from Renminbi to
U.S. dollars has been made at the rate of Rmb 8.2766 = US$1.00, the
rate quoted by the People's Bank of China at the close of business on
June 30, 2004. No representation is made that the Renminbi amounts
could have been, or could be, converted into U.S. dollars at that rate
or at any other certain rate on June 30, 2004 or at any other date.
CHINA YUCHAI INTERNATIONAL LIMITED
Selected Balance Sheet Items
(Rmb and US$ amounts expressed in thousands)
As of As of
December 31, 2003 June 30, 2004
(Audited) (Unaudited)
-------- ---------
RMB RMB US$
Cash Balances 631,938 437,523 52,863
Trade Accounts Receivable, Net 849,611 1,098,805 132,760
Inventories, Net 877,334 1,165,430 140,810
Amount due from a related company 13,347 202,866 24,511
Working Capital 962,804 1,236,443 149,390
Total Assets 4,033,632 4,814,108 581,653
Trade Accounts Payable 731,966 1,020,426 123,290
Short-Term and Long-Term Borrowings 298,000 390,000 47,121
(including a loan from a related
party as of December 31, 2003)
Shareholders' Equity 1,991,687 2,285,657 276,159
Note: The Company's functional and reporting currency is Renminbi, the
translation of amounts from Renminbi to U.S. dollars is solely for the
convenience of the reader. Translation of amounts from Renminbi to
U.S. dollars has been made at the rate of Rmb 8.2766 = US$1.00, the
rate quoted by the People's Bank of China at the close of business on
June 30, 2004. No representation is made that the Renminbi amounts
could have been, or could be, converted into U.S. dollars at that rate
or at any other certain rate on June 30, 2004 or at any other date.