WUHAN, China, Aug. 13 /Xinhua-PRNewswire/ -- China Automotive Systems, Inc. (Nasdaq: CAAS), a leading power steering components and systems supplier in China, today announced financial results for the second quarter ended June 30, 2007.
2007 Second Quarter Highlights:
-- Net sales increased to US$36.3 million, reflecting 47% year-over-year
growth;
-- Net sales from steering components for passenger and light-duty
vehicles increased to US$ 22.8 million, reflecting a 45% year-over-year
growth;
-- Net sales from steering components for commercial vehicles increased to
US$ 9.9 million, reflecting a 64% increase year-over-year;
-- Operating income increased to US$6.3 million, reflecting a 100%
year-over-year growth;
-- Net income was US$2.5 million, reflecting 227% year-over-year growth;
and
-- Diluted earnings per share was US$0.10
CAAS reported net sales of $36.3 million for the second quarter ended June 30, 2007 compared with $24.7 million in the same period in 2006 and $28.4 million for the first quarter of 2007, reflecting a 47% year-over-year growth and a 28% quarter-over-quarter growth, respectively. Net income for the second quarter of 2007 was $2.5 million, or $0.10 per fully diluted share, as compared with $0.8 million, or $0.03 per fully diluted share, in the same period a year ago and $1.6 million, or $0.07 per fully diluted share, for the first quarter of 2007, reflecting a 227% year-over-year and 49% quarter-over-quarter growth, respectively.
Second quarter net sales for 2007 from steering products for passenger and light-duty vehicles increased to $22.8 million as compared with $15.7 million reported in the same period for 2006, reflecting a 45% year-over-year growth. Net sales from steering products for commercial vehicles for the second quarter of 2007 increased to $9.9 million as compared with $6.0 million reported in the same period for 2006, reflecting a 64.4% year-over-year growth. Net sales from oil pumps and sensors for the second quarter of 2007 increased to $3.6 million as compared with $2.9 million reported in the same period for 2006, reflecting a 24.1% year-over-year growth.
"We are delighted to report a strong quarter as we benefited from solid and balanced growth in both the passenger vehicle and commercial vehicle sectors in China. For passenger vehicles, our key customers Chery Auto, Brilliance Automotive, BYD Auto and our new customer FAW Volkswagen, all posted stronger sales growth than the industry average in China in the first half of 2007. Importantly, the heavy-truck unit sales growth in the first half of 2007 has exceeded 58%. We are also encouraged that the commercial vehicle sector has finally returned to a high-growth mode as China's infrastructure build-out continues for the forthcoming 2008 Beijing Olympics, 2010 Shanghai World Expo and as tier 2 cities' further their urban development." said Mr. Hanlin Chen, Chairman and Chief Executive Officer of China Automotive Systems.
Gross profit for the second quarter of 2007 increased to $12.1 million as compared with $9.3 million reported in the same period for 2006 and $9.2 million for the first quarter of 2007, reflecting a 30% year-over-year increase and a 32% quarter-over-quarter increase, respectively. Operating income for the second quarter of 2007 increased to $6.3 million as compared with $3.1 million reported in the same period for 2006 and $5.2 million for the first quarter of 2007, reflecting a 100% year-over-year growth and a 21% quarter-over-quarter growth, respectively.
Total cash and cash equivalents as of June 30, 2007 were $19.6 million as compared with $27.4 million as of December 31, 2006. Stockholder's equity increased to $60.1 million as of June 30, 2007 from $53.4 million as of December 31, 2006.
Mr. Daming Hu, Chief Financial Officer, stated, "We have been focusing on improving our production efficiency and raising the technological contents in our products. As a result of technological improvement to our production lines, we reduced product costs and partially offset the impact from a decline in our average selling prices. Gross margins were 33.3% for the three months ended June 30, 2007, down from 37.5% for the same period of 2006, but improved from 32.4% in the first quarter of 2007. During the second quarter, we also successfully controlled our general and administrative expenses. We continue to tighten our credit control and strengthened accounts receivable collections. In the second quarter, we lowered our general and administrative expenses by nearly 12% as compared with the same period in 2006. We also have received an income tax refund of $526,272 from the local government for domestic equipment purchased during this quarter. We continue to implement our cost control program and utilize the favorable governmental policies to improve the bottom line and strengthen shareholders' value."
Recent Development
In May 2007, the Company announced that its subsidiary, Jingzhou Henglong Automotive Parts Co., has entered into an agreement with FAW Volkswagen to supply high-quality power steering products. The agreement commenced immediately, with a term of one year and an option to extend for a further two years. The power steering products are being installed in Volkswagen's Jetta vehicles manufactured in China. The first commercial shipment was delivered on May 21st 2007. With this supply agreement, China Automotive Systems has entered into Volkswagen's global sourcing system and become a tier 1 supplier to one of the largest auto makers in China.
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 seven 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 800,000 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 .
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs, including, but not limited to, statements concerning the Company's operations, financial performance and, condition. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The Company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others, the impact of competitive products, pricing and new technology; changes in consumer preferences and tastes; and effectiveness of marketing; changes in laws and regulations; fluctuations in costs of production, and other factors as those discussed in the Company's reports filed with the Securities and Exchange Commission from time to time.
China Automotive Systems, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended June 30
--------------------------
2007 2006
---------- ----------
Net product sales, including $1,196,996 and
$794,200 to related
parties at 2007 and 2006 $36,312,338 $24,747,912
Cost of product sold, including $1,442,625
and $674,207 purchased from
related parties at 2007 and 2006 24,218,532 15,476,767
---------- ----------
Gross profit 12,093,806 9,271,145
---------- ----------
Add: Gain on other sales 147,993 117,887
---------- ----------
Less: Operating expenses-
Selling expenses 2,813,166 2,386,901
General and administrative expenses 2,080,578 2,352,153
R&D expenses 468,517 251,394
Depreciation and amortization 935,173 1,253,604
---------- ----------
Total Operating expenses 6,297,434 6,244,052
---------- ----------
Income from operations 5,944,365 3,144,980
---------- ----------
Add: Other income, net
Financial (expenses) (16,495) (177,477)
---------- ----------
Income before income taxes 5,927,870 2,967,503
Less: Income taxes 1,067,535 850,739
---------- ----------
Income before minority interests 4,860,335 2,116,764
Less: Minority interests 2,405,181 1,365,128
---------- ----------
Net income $2,455,154 $751,636
========== ==========
Net income per common share
Basic and diluted $0.10 $0.03
========== ==========
Weighted average number of common shares
outstanding
Basic 23,959,702 23,254,121
Diluted 23,962,153 23,267,235
China Automotive Systems, Inc.
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
Three Months Ended June 30
----------------------------
2007 2006
------------- -------------
Net income $2,455,154 $751,636
Other comprehensive income:
Foreign currency translation gain 1,265,553 --
------------- -------------
Comprehensive income $3,720,707 $751,636
=========== ===========
China Automotive Systems, Inc.
Condensed Consolidated Balance Sheets
June 30, 2007 December
(Unaudited) 31, 2006
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $19,627,606 $27,418,500
Pledged cash deposits 2,828,672 3,484,335
Accounts and notes receivable, net, including
$1,850,422 and
$1,770,933 from related parties at 2007 and
2006. 69,919,862 57,234,383
Advance payments and other, including
$223,684 and $487,333 to
related parties at 2007 and 2006. 1,141,534 837,014
Inventories 17,364,810 15,464,571
------------ ------------
Total current assets $110,882,484 $104,438,803
------------ ------------
Long-term Assets:
Property, plant and equipment, net $41,656,104 $40,848,046
Intangible assets, net 418,593 3,140,548
Other receivables, net, including $811,653
and $738,510 from
related parties at 2007 and 2006 1,145,384 966,715
Advance payment for property, plant and
equipment, including
$1,315,243 and $488,873 to related parties at
2007 and 2006. 5,633,146 2,640,708
Long-term investments 72,368 73,718
------------ ------------
Total assets $159,808,079 $152,108,538
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loans $11,447,368 $15,384,615
Accounts and notes payable, including
$987,473 and $640,405 to
related parties at 2007 and 2006. 42,487,454 37,647,913
Customer deposits 265,730 146,171
Accrued payroll and related costs 2,006,378 1,506,251
Accrued expenses and other payables 8,979,953 11,078,186
Accrued pension costs 3,421,258 3,266,867
Taxes payable 7,622,569 5,914,362
Amounts due to shareholders/directors 370,080 358,065
------------ ------------
Total current liabilities $76,600,790 $75,302,430
------------ ------------
Long-term liabilities:
Advances payable 321,392 313,151
------------ ------------
Total liabilities $76,922,182 $75,615,581
------------ ------------
Minority interests $22,798,874 $23,112,667
------------ ------------
Stockholders' equity:
Preferred stock, $0.0001 par value -
Authorized - 20,000,000
Shares issued and outstanding - None $-- $--
Common stock, $0.0001 par value - Authorized
- 80,000,000
Shares Issued and Outstanding - 23,959,702
shares and 23,851,581
shares at June 30, 2007 and December 31,
2006, respectively 2,396 2,385
Additional paid-in capital 29,994,873 28,651,959
Retained earnings-
Appropriated 6,078,613 6,209,909
Unappropriated 20,276,788 16,047,237
Accumulated other comprehensive income 3,734,353 2,468,800
------------ ------------
Total stockholders' equity $60,087,023 $53,380,290
------------ ------------
Total liabilities and stockholders' equity $159,808,079 $152,108,538
========= =========
For further information, please contact:
Jie Li
China Automotive Systems
Email: jieli@chl.com.cn
Kevin Theiss
Investor Relations
The Global Consulting Group
Tel: +1-646-284-9409
Email: ktheiss@hfgcg.com
Stacy Dimakakos
Media Relations
The Global Consulting Group
Tel: +1-646-284-9417
Email: sdimakakos@hfgcg.com