HUBEI, China, March 31, 2005 (PRIMEZONE) -- China Automotive Systems, Inc. (Nasdaq:CAAS) today announced financial results for its fourth quarter and year ended December 31, 2004 -- reflecting increased sales contributions from the heavy-duty truck market.
Net sales from continuing operations for the fourth quarter of 2004 were $17.3 million compared with $16.7 million for the same period a year earlier. Net income from continuing operations for the same period was $2.0 million, or $0.09 per basic and diluted share, compared with $568,000, or $0.03 per basic and diluted share, a year earlier. As previously announced, during the fourth quarter of 2004 the company completed an equity exchange agreement whereby its equity interest in a non-core joint venture business was exchanged for an equity interest position owned by an investment firm in one of the company's four automotive product joint ventures.
Net sales from continuing operations for the full year reflect a modest increase of 8.6 percent to $58.2 million from $53.6 million, despite softness in the overall automotive passenger vehicle market in China. Gross profit from continuing operations in 2004 was $23.1 million compared with $25.0 million in 2003, which was impacted by reduced selling prices of auto parts in China and increased raw material costs. Net income for the year increased 77 percent to $6.9 million, or $0.30 per basic and diluted share, from $3.9 million, or $0.18 per basic and diluted share, a year earlier, primarily as a result in a decrease in the allocation to minority interests and an income tax refund in 2004 resulting from the purchase of domestic equipment. In addition, net income benefited from a decrease in general and administrative expenses resulting from the recovery of a previously written-off receivable in the amount of $490,000. Prior year results included $1.3 million of stock based compensation.
"Results for 2004 were sustained by management's ability to shift the company's sales focus to higher margin truck related products in order to address softness in the Chinese automotive market, which has been spurred over the past few quarters, in part, by the government's tightening credit policy," said Hanlin Chen, chairman and chief executive officer of China Automotive Systems.
He noted that sales of the integral power steering systems increased 44.3 percent to $27.0 million from $18.7 last year, representing 46.3 percent of total sales in 2004 compared with 34.8 percent of total sales in 2003 -- underscoring the company's success at penetrating the heavy-duty market. Chen highlighted the company's sustained production and sales of steering pumps produced at its Zhejiang facility, with sales increasing sharply to $4.3 million from $1.7 million in 2003.
He also highlighted the company's selection, announced during the fourth quarter, as an exclusive supplier for steering pumps for the Spark 1.0 vehicle manufactured by SAIC GM Wuling Automobile Co. Ltd., which expects to produce 10,000 units of this model in 2005.
As an example of the company's strategy to expand into the international market, Chen noted the signing of a technology licensing agreement subsequent to year end with Korea Delphi Automotive Systems Corporation to manufacture and export its M150/M200 model automotive steering systems. These systems will be utilized in GM Daewoo Auto & Technology Company's Matiz vehicle.
He emphasized that international expansion will continue to be a key focus of the company in 2005, supported by China Automotive's manufacturing excellence, research and development capabilities, technical strengths, as well as potential complementary acquisitions. Chen cited electronic power steering technology and automotive sensors as two exciting new product opportunities.
At December 31, 2004, the company's cash and cash equivalents were $11.2 million and working capital was $11.5 million, with a current ratio of 1.21:1. Total assets at December 31, 2004 were $105.5 million and stockholders' equity was $32.1 million.
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 four 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, 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.
Consolidated Statements of Operations
(Thousands, Except Per Share Data)
(Unaudited) (Audited)
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2004 2003 2004 2003
Net sales $17,250 $16,701 $58,186 $53,625
Cost of sales 11,054 8,258 35,043 28,636
---------- ---------- ---------- ----------
Gross profit 6,196 8,443 23,143 24,989
---------- ---------- ---------- ----------
Costs and Expenses
Selling 1,550 1,568 3,474 2,719
General and
administrative 497 2,574 6,479 7,604
Research and
development 1,519 1,017 1,518 1,017
Depreciation and
amortization 464 1,065 848 1,322
Stock-based
compensation 55 -- 55 1,300
---------- ---------- ---------- ----------
Total costs and
expenses 4,085 6,224 12,374 13,962
---------- ---------- ---------- ----------
Income from
operations 2,111 2,219 10,769 11,027
---------- ---------- ---------- ----------
Other non-operating
income 1,001 86 1,652 532
Financial expenses (190) (108) (731) (333)
---------- ---------- ---------- ----------
Other income
(expense), net 811 (22) 921 199
---------- ---------- ---------- ----------
Income before income
taxes 2,922 2,197 11,690 11,226
Income tax expense
(benefit) (524) 808 619 1,751
---------- ---------- ---------- ----------
Income before
minority interests 3,446 1,389 11,071 9,475
Minority interests
from continuing
operations 1,448 821 4,182 5,476
---------- ---------- ---------- ----------
Income from
continuing
operations 1,998 568 6,889 3,999
Loss from
discontinued
operations -- (128) (22) (128)
---------- ---------- ---------- ----------
Net income $1,998 $440 $6,867 $3,871
========== ========== ========== ==========
Net Income (Loss) Per
Common Share -
Basic and Diluted:
Income from
continuing
operations $0.09 $0.03 $0.30 $0.19
Loss from
discontinued
operations (0.00) (0.01) (0.00) (0.01)
---------- ---------- ---------- ----------
Net income $0.09 $0.02 $0.30 $0.18
========== ========== ========== ==========
Weighted average
common shares
outstanding:
Basic 22,574,542 21,773,149 22,574,542 21,773,149
========== ========== ========== ==========
Diluted 22,582,494 22,075,006 22,582,494 22,075,006
========== ========== ========== ==========