China Automotive Systems Reports 2006 First Quarter Results
First Quarter 2006 Highlights:
-- Total net sales for the period increased to US$ 21.0 million,
reflecting a 50% year-over-year growth;
-- Net sales from steering components for passenger and light-duty
vehicles increased to US$ 15.1 million, reflecting a 52% year-over-year
growth;
-- Net sales from steering components for commercial vehicles decreased to
US$ 5.6 million, reflecting a 13% year-over-year decline;
-- Operating income for the first quarter of 2006 increased to $ 2.5
million, reflecting a 56% year-over-year growth;
-- Net income rose to $ 1.1 million, reflecting a 25% year-over-year
growth; and
-- Diluted earnings per share was US$ 0.05 reflecting a 25% year-over-year
increase
WUHAN, Hubei, China, May 10 /Xinhua-PRNewswire/ -- China Automotive Systems, Inc. , a leading power steering components and systems supplier in China, today announced 2006 First Quarter financial results.
Total net sales for the first quarter of 2006 was $ 21.0 million as compared with $ 14.0 million reported in the same period for 2005 and $ 18.6 million for the fourth quarter of 2005, reflecting a 50% year-over-year growth and a 13% quarter-over-quarter growth respectively. Net income for the first quarter of 2006 was $ 1.1 million, or $ 0.05 per diluted share as compared with $ 0.9 million, or $ 0.04 per diluted share in the same period a year ago and $ 0.9 million, or $ 0.04 per diluted share, for the fourth quarter of 2005, reflecting a 25% year-over-year and quarter-over-quarter growth respectively.
Net sales from steering products for passenger and light-duty vehicles for the first quarter of 2006 increased to $ 15.1 million as compared with $ 10.0 million reported in the same period for 2005, reflecting a 52% year-over-year growth. Net sales from steering products for commercial vehicles for the first quarter of 2006 decreased to $ 5.6 million as compared with $ 6.5 million reported in the same period for 2005, reflecting a 13% year-over-year decline.
"Thanks to strong first quarter performance in the passenger vehicle market, we are delighted to report another record high in quarterly net sales. The recently-introduced consumption tax on luxury vehicles indirectly benefits economy car makers. In the first quarter, we experienced a substantially higher demand for our passenger vehicle power steering products, which challenged our existing production capacity. We successfully completed a $ 5 million in capital raise, which will help us expand our production facility and increase our output. We also forged a stronger relationship with Chery Automobile by entering into a joint venture agreement. The new joint venture facility upon completion is also expected to resolve our production bottleneck to meet the growing market demand. On the commercial vehicle side, although our first quarter net sales posted a sequential increase, the Chinese government's regulations on the real estate market and coal mining continue to depress the domestic heavy truck market,'' said Mr. Hanlin Chen, Chairman and Chief Executive Officer of China Automotive Systems.
Gross profit for the first quarter of 2006 increased to $ 6.9 million as compared with $ 5.0 million reported in the same period for 2005 and $ 6.0 million for the fourth quarter of 2005, reflecting a 38% year-over-year increase and a 15% quarter-over-quarter increase respectively. Operating income for the first quarter of 2006 increased to $ 2.5 million as compared with $ 1.6 million reported in the same period for 2005 and $ 2.3 million for the fourth quarter of 2005, reflecting a 56% year-over-year growth and a 9% quarter-over-quarter growth respectively.
Mr. Daming Hu, chief financial officer stated, ''The Chinese government's regulation and the recent interest rate raise impact both commercial vehicle and passenger vehicle sectors of China's auto industry. Due to an effective cost reduction program, we have accomplished a sequential gross margin improvement, an increase from 32% in the previous quarter to 33% in the current quarter. We continue to control our selling and other administrative expenses while growing our top line. The reason the net income does not grow at the same rate as the net sales is due to our relatively lower equity ownership in Henglong Automotive Parts, the subsidiary that contributed to the largest portion of our total net sales.''
New Development
On May 4th, 2006, the Company announced that its wholly-owned subsidiary, Great Genesis, had entered into a joint venture agreement with Chery Technology Ltd., a wholly owned subsidiary of Chery Automobile Co. Ltd. ''Chery Auto'', the fastest-growing independent automobile manufacturer in China. The joint venture will focus on R&D and manufacturing of power steering systems and components. Most products of the joint venture will be supplied to Chery Auto. With the new facility in Wuhu, China Automotive Systems will also commence developing sales to China's eastern market.
Mr. Chen added: ''As a result of this new joint venture with Chery Auto, we expect the export market to become the focal point in next two years.''
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.
Condensed Consolidated Statements of Operations
Three Months Ended March 31
------------------------
2006 2005
-----------------
Net sales from continued operations,
including $583,539 and $454,925
to related parties at March 31, 2006
and December 31, 2005, respectively $20,964,452 $13,976,450
Cost of sales, including $655,995
and $405,756 purchased from
related parties at March 31, 2006
and December 31, 2005, respectively 14,019,255 8,946,109
------------- ------------
Gross profit 6,945,197 5,030,341
------------- ------------
Costs and expenses:
Selling 909,852 674,068
General and administrative 2,620,174 1,770,285
Technology development expenses 189,747 357,709
Depreciation and amortization 688,490 614,821
------------- ------------
Total costs and expenses 4,408,263 3,416,883
------------- ------------
Income from operations 2,536,934 1,613,458
------------- ------------
Other income (expenses):
Other non-operating income 83,340 25,319
Financial expenses (334,386) (283,233)
------------ ------------
Other income (loss), net (251,046) (257,914)
------------ ------------
Income before income taxes 2,285,888 1,355,544
Income taxes 200,711 250,962
------------ ------------
Income before minority interests 2,085,177 1,104,582
Minority interests 990,799 238,399
------------ ------------
Net income $1,094,398 $866,183
============ ============
Basic $0.05 $0.04
============ ============
Diluted $0.05 $0.04
============ ============
Weighted average number of common
shares outstanding -
Basic 22,680,813 22,574,543
Diluted 22,704,753 22,597,042
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