HUBEI, China, May 20, 2004 (PRIMEZONE) -- China Automotive Systems, Inc. (OTCBB:CAAS) today announced financial results for the quarter ended March 31, 2004, establishing a new record for production of power steering systems during the month of March.
Net sales for the first quarter increased 15.6 percent to $12.834 million from $11.102 million a year earlier. Gross profit as a percentage of sales was 36 percent compared with 47 percent a year ago, which was impacted by previously identified factors, such as raw materials and labor costs, that management is addressing. Income from operations increased three percent to $1.876 million compared with $1.821 million a year ago. Income before minority interest was $1.598 compared with $1.555 million in 2003. The minority interest adjustment was $584,000 compared with $1.589 million a year earlier. Net income for the 2004 first quarter was $1.014 million, or $0.04 per diluted share, compared with a net loss of $34,000, or $0.00 per share, a year ago. Net income for the first quarter of 2003 was impacted by a non-cash charge of $1.3 million related to stock-based compensation at the corporate level.
"Our first quarter performance indicates the company is on target to increase its annual output production to approximately 600,000 units, comprised of integral ball and nut power steering gears and rack and pinion steering products," said Hanlin Chen, chairman and chief executive officer of China Automotive Systems.
He noted that the company produced 61,456 sets of power steering systems during the month of March compared with 31,244 units in the same month a year earlier, representing a 97 percent increase and surpassing the previous monthly record of 49,136 units.
Chen indicated that a comparison of net income for the 2004 first quarter to the 2003 quarter was impacted by the company's varying equity interests in the five Sino-foreign joint ventures through which it conducts its operations, all of which were consolidated in both 2004 and 2003. China Automotive records the minority interests' share in the earnings of the respective Sino-foreign joint ventures for each period. Since the company does not own the same equity interest in each Sino-foreign joint venture, a comparison of the company's consolidated results of operations for different periods can be significantly affected by the performance mix of the individual joint ventures. The minority interests' aggregate share in the earnings of the Sino-foreign joint ventures decreased in 2004 as compared to 2003 primarily as a result of a decrease in net income from Henglong, a 42 percent-owned Sino-foreign joint venture, and an increase in net income from Jiulong, an 81 percent-owned Sino-foreign joint venture.
Chen highlighted several other important developments for the quarter, including the addition of four new OEM customers: First Auto Works Car Company, Ltd.; Chongqing Lifan Group; Ninbo Bird Group Company, Ltd.; and Anhui Jianghuai Automobile Company, Ltd.
"During the first quarter our team worked diligently to secure OEM verification and certification of our products, and we received a contract from First Auto Works Car Company, a Chinese luxury automobile manufacturer. Initial shipments of power steering units commenced shortly after the end of the quarter", Chen said.
He added that products for Chongqing Lifan and Ninbo are currently undergoing testing and China Automotive Systems' engineers are in the process of developing an oil pump for Anhui Jinaghui's business car model.
Separately, the company announced the formal opening of an office in Seoul, Korea on April 19, 2004, to better facilitate expansion in this growing market.
ABOUT THE COMPANY
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 five Sino-foreign joint ventures.
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 and 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. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31,
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2004 2003
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Net sales $ 12,833,756 $ 11,102,071
Cost of sales 8,245,750 5,902,110
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Gross profit 4,588,006 5,199,961
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Costs and expenses:
Selling 408,434 279,791
General and administrative 2,185,072 1,714,343
Depreciation and amortization 118,384 84,339
Stock-based compensation -- 1,300,000
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Total costs and expenses 2,711,890 3,378,473
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Income from operations 1,876,116 1,821,488
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Other income (expense):
Other non-operating income 118,833 238,476
Financial expenses (84,888) (59,105)
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Other income (expense), net 33,945 179,371
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Income before income taxes 1,910,061 2,000,859
Income taxes 312,400 445,528
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Income before minority interest 1,597,661 1,555,331
Minority interests 583,872 1,589,429
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Net income (loss) $ 1,013,789 $ (34,098)
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Net income per common share -
Basic $ 0.04 $ (0.00)
Diluted $ 0.04 $ (0.00)
Weighted average number of
common shares outstanding -
Basic 22,574,542 21,244,475
Diluted 22,574,542 21,244,475