HUBEI, China, Nov. 15, 2004 (PRIMEZONE) -- China Automotive Systems, Inc. (Nasdaq:CAAS) today announced results for the third quarter ended September 30, 2004, reflecting continued demand for its power steering systems and components within the Chinese automotive market.
Net sales for the third quarter of 2004 climbed 11.5 percent to $14.6 million from $13.1 million a year earlier. Net income for the same period increased 4.0 percent to $2.0 million, or $0.09 per diluted share, from $1.9 million, or $0.09 per diluted share, a year earlier.
Net sales for the nine-month period increased 22.0 percent to $43.7 million from $36.9 a year ago. For the same period, net income jumped 42.4 percent to $4.8 million, or $0.21 per diluted share, from $3.4 million, or $0.16 per diluted share, a year earlier.
"While the automobile market in China has softened somewhat over the past few months, demand for integral power steering systems -- which are utilized for heavy duty vehicles, including coaches and vans -- contributed to the company's strong sales performance for the quarter," said Hanlin Chen, chief executive officer.
Chen also noted that overall the Chinese economy continues to be strong, which supports demand for heavy duty vehicles and steering components and systems. "This situation, coupled with high demand for energy which, in part, requires heavy duty machinery for transporting fossil fuels, supports our continued optimism. In addition, demand for heavy duty vehicles benefited from the 'Transportation Safety Law' which was implemented in China in May 2004," Chen said. He added that China Automotive sold 32,500 units of its patented integral power steering product to the mid-heavy duty vehicle market during the third quarter of 2004, doubling sales over the same period a year earlier and contributing approximately 40 percent of sales.
He emphasized that the company is now benefiting from its investment in advanced manufacturing equipment, which is lowering the company's labor costs and reducing the weight of both integral and rack and pinion steering system parts and components. Chen added that another key benefit is the reduction in the amount of raw material requirements -- a particularly important consideration given recent soaring steel prices.
As previously announced, the company entered into an equity exchange agreement effective during the third quarter of 2004 whereby China Automotive's 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. "As a result of this transaction, the company is completely focused on expanding its core-products, technology and manufacturing capabilities for automotive-related market opportunities," Chen said.
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 and meeting its production and sales expectations for its joint ventures. 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.
(Financial Table Follows)
CHINA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
2004 2003 2004 2003
----------- ----------- ----------- -----------
Net sales $14,598,707 $13,087,884 $43,682,280 $36,923,748
Cost of sales 8,944,911 7,428,901 26,667,088 20,378,268
----------- ----------- ----------- -----------
Gross profit 5,653,795 5,658,983 17,015,191 16,545,480
----------- ----------- ----------- -----------
Costs and expenses:
Selling 648,127 496,428 1,935,483 1,151,754
General and
administrative 1,396,212 1,512,779 6,062,232 5,029,546
Depreciation and
amortization 152,152 91,645 402,767 256,940
Stock-based
compensation -- -- -- 1,300,000
----------- ----------- ----------- -----------
Total costs and
expenses 2,196,491 2,100,852 8,400,482 7,738,240
----------- ----------- ----------- -----------
Income from
operations 3,457,304 3,558,131 8,614,709 8,807,240
----------- ----------- ----------- -----------
Other income
(expense):
Other non-
operating
income 223,302 98,855 668,735 446,776
Financial
expenses (212,138) (102,506) (557,740) (225,165)
----------- ----------- ----------- -----------
Other income
(loss), net 11,164 (3,651) 110,995 221,611
----------- ----------- ----------- -----------
Income before
income taxes 3,468,468 3,554,480 8,725,704 9,028,851
Income taxes 76,730 (37,811) 1,142,118 942,520
----------- ----------- ----------- -----------
Income before
minority
interest 3,091,738 3,592,291 7,583,586 8,086,331
Minority
interests 1,062,140 1,638,153 2,734,841 4,655,939
----------- ----------- ----------- -----------
Net income $ 2,029,598 $ 1,954,138 $ 4,848,745 $ 3,430,392
=========== =========== =========== ===========
Net income per
common share
-- Basic $ 0.09 $ 0.09 $ 0.21 $ 0.16
-- Diluted $ 0.09 $ 0.09 $ 0.21 $ 0.16
Weighted average
number of
common shares
outstanding
-- Basic 22,574,542 22,023,281 22,574,542 21,773,149
-- Diluted 22,575,637 22,411,383 22,574,907 22,075,006