China Automotive Systems Reports
WUHAN, Hubei, China, March 31, 2006; China Automotive Systems, Inc. , a leading power steering components and systems supplier in China, today announced 2005 Fourth Quarter and Full Year financial results.
Total net sales for the fourth quarter of 2005 was $18.6 million as compared with $14.5 million reported in the same period for 2004 and $14.3 million for the third quarter of 2005, reflecting a 28.2% year-over-year growth and a 30% quarter-over-quarter growth respectively. Net income for the fourth quarter of 2005 was $0.87 million, or $0.04 per diluted share as compared with $2.02 million, or $0.09 per diluted share in the same period a year ago and $1.08 million, or $0.05 per diluted share, for the third quarter of 2005.
"Despite general price pressure, we have been able to achieve a historical high in quarterly net sales by increasing sales in the passenger vehicle sector. By developing good relationships with fast-growing economy car makers such as Chery Auto and Geely Auto, we have been able to maintain our leading position in the competitive passenger vehicle power steering system arena. Our total sales volume to passenger vehicle sector increased to 323,847 units in 2005 from 206,364 units in 2004, representing a 56.9% growth,'' said Mr. Hanlin Chen, Chairman and Chief Executive Officer of China Automotive Systems.
2005 Full Year Highlights:
-- Net sales for the full year increased to US$63.57 million, reflecting a
9% year-over-year growth;
-- Net sales from steering components for passenger and light-duty
vehicles for the full year increased to $40.04 million, reflecting a
47% year-over-year growth;
-- Net sales from steering components for commercial vehicles decreased to
$17.53 million, reflecting a 34% year-over-year decline;
-- Full Year 2005 net income was US$3.32 million, reflecting a 52% year-
over-year decline; and
-- Full Year 2005 diluted earnings per share was US$0.15 reflecting a 50%
year-over-year decline.
Increase
2005 2004 (Decrease)
Amount Amount Amount Percentage
($m) ($m) ($m)
Steering gears for commercial
vehicles 17.53 26.66 (9.12) (34%)
Steering gears for passenger
vehicles 40.04 27.27 12.78 47%
Steering pumps 5.99 4.26 1.73 41%
Total Net sales 63.57 58.19 5.39 9%
Net Income 3.32 6.87 (3.55) (52%)
Diluted earnings per share $0.15 $0.30 $(0.15) (50%)
Mr. Daming Hu, Chief Financial Officer stated, ''2005 has been a challenging year for both commercial vehicle and passenger vehicle sectors of China's auto industry. Our gross profit margin decreased to 35% in 2005 from 40% in 2004. The decline was principally due to new regulations imposed by the Chinese government and substantial increases in the prices of gasoline. During 2005, intense domestic competition and government regulation caused a significant 10% decline in the ASP (Average Selling Price) of passenger vehicles. Sequentially, the downward price pressure was passed onto auto part makers. On the commercial vehicle side, China's policy to cool down the over- inflated real estate market resulted in a substantial 36% decrease in the demand for heavy-duty trucks.''
Sales expenses were $4.6 million for 2005, as compared to $3.5 million for 2004, an increase of $1.1 million or 32.0%. The increase was mainly attributable to the increase of after-sales service expenses. In 2005, the Chinese government fully implemented consumer rights protection policies on the "recall" of flawed vehicles. In turn, the automobile manufacturers introduced a policy unilaterally requiring the automotive parts suppliers to pay a "3-R Guarantees" service charge (for repair, replacement and refund) in an amount equal to one percent (1%) of the total value of the parts supplied.
Mr. Hu also said, ''In 2005, we improved our manufacturing efficiency and reduced the production cost: steering gears were reduced by 5%; steering pumps were reduced by 1% and steering accessories were reduced by 6%. We believe that our focus on cost control enables us to remain competitive in the marketplace.''
About CAAS
Based in Hubei Province, People's Republic of China, China Automotive Systems, Inc. is a leading supplier of power steering components and systems to the Chinese automotive industry, operating through four Sino-foreign joint ventures. The Company offers a full range of steering system parts for passenger automobiles and commercial vehicles. The Company currently offers 4 separate series of power steering and 307 models of power steering with an annual production capacity of 700,000 sets, steering columns, steering oil pumps and steering hoses. Its customer base is comprised of leading Chinese auto manufacturers such as China FAW Group, Corp., Donfeng Auto Group Co., Ltd., Brilliance China Automotive Holdings Ltd., Beiqi Foton Motor Co., Ltd. and Chery Automobile Co., Ltd. etc. For more information, please visit: http://www.caasauto.com/ .
China Automotive Systems, Inc. and Subsidiaries
Consolidated Statements of Operations
Years Ended December 31, 2005, 2004 and 2003
2005 2004 2003
Net sales $63,572,301 $58,185,845 $53,624,868
Cost of sales 41,105,478 35,042,352 28,635,908
Gross profit 22,466,823 23,143,493 24,988,960
Costs and expenses:
Selling 4,585,570 3,473,804 2,719,576
General and
administrative 6,244,646 6,478,859 7,603,756
Research and
development 966,782 1,518,512 1,017,031
Depreciation and
amortization 2,577,944 848,009 1,321,601
Stock-based
compensation 68,850 55,125 1,300,000
Total costs and
expenses 14,443,792 12,374,309 13,961,964
Income from
operations 8,023,031 10,769,184 11,026,996
Other income (expenses):
Other non-operating
income 510,795 1,651,560 532,583
Financial expenses (1,166,167) (730,962) (333,336)
Other income, net (655,372) 920,598 199,247
Income before income
taxes 7,367,659 11,689,782 11,226,243
Income taxes 1,371,863 618,400 1,750,940
Income before
minority interest 5,995,796 11,071,382 9,475,303
Minority interest 2,680,318 4,182,454 5,476,495
Net income from
cont'd operation 3,315,478 6,888,928 3,998,808
Net loss from
discont'd operation -- (21,591) (127,539)
Net income $3,315,478 $6,867,337 $3,871,269
Net income per
common share -
Net income from
cont'd operation -
Basic and diluted $ 0.15 $ 0.31 $ 0.19
Net (loss) from
discont'd operation -
Basic and diluted $ 0.00 $ (0.01) $ (0.01)
Basic $ 0.15 $ 0.30 $ 0.18
Diluted $ 0.15 $ 0.30 $ 0.18
Weighted average common
shares outstanding -
Basic 22,574,543 22,574,543 21,773,149
Diluted 22,588,713 22,582,494 22,075,006
For further information, please contact:
Mr. Jie Li, Investor Relations and Communications
China Automotive Systems, Inc.
Tel: +86-27-5981-8527
Email: jieli@chl.com.cn
Christopher Chu
The Global Consulting Group
Tel: +1-646-284-9426
Email: cchu@hfgcg.com