omniture

China Automotive Systems Reports 2006 Fourth Quarter and Full Year Results

2007-04-03 12:04 1681


- Fiscal year 2006 total net sales grew 51% and net income increased by 45% -

WUHAN, Hubei, China, April 3 /Xinhua-PRNewswire/ -- China Automotive

Systems, Inc. (Nasdaq: CAAS), a leading power steering components and systems

supplier in China, today announced 2006 Fourth Quarter and Full Year financial

results.

2006 Fourth Quarter Highlights:

-- Net sales increased to US$27.7 million, reflecting 49% year-over-year

growth;

-- Net income was US$1.4 million, reflecting a 65% year-over-year growth;

and

-- Diluted earnings per share was US$0.06 reflecting a 50% year-over-year

growth

2006 Full Year Highlights:

-- Net sales increased to US$95.8 million, reflecting a 51% year-over-year

growth;

-- Net sales from steering components for passenger and light-duty

vehicles increased to $60.3 million, reflecting a 51% year-over-year

growth;

-- Net sales from steering components for commercial vehicles increased to

$25.1 million, reflecting a 43% year-over-year growth;

-- Net income was US$4.8 million, reflecting a 45% year-over-year growth;

and

-- Diluted earnings per share was US$0.21 reflecting a 40% year-over-year

growth

"We are pleased to report strong fiscal year 2006 results as evidenced by

both top line and bottom line growth. China Automotive Systems has become a

reliable and key supplier to Chinese national automakers such as Chery Auto,

Geely Auto, Brilliance Auto and Beiqi Foton. Our quality products and

favorable pricing enable our customers to stay competitive and expand their

market share. The Chinese domestic auto industry celebrated a successful 2006.

There were four factors that propelled this robust growth: strong consumer

demand, highway infrastructure build-up, favorable vehicle pricing, and the

maturity of Chinese national OEMs. We believe that these factors will continue

to be the driving force behind the Chinese auto industry in 2007. In addition,

we see the growing export of both commercial and passenger vehicles and the

forthcoming Beijing Olympics Games as two other major catalysts that will

contribute to accelerate the growth of the Chinese auto industry. We continue

to focus on cost management, quality control, R&D, and strategic partnerships.

We are confident that we will continue to expand our market share in 2007. Our

goal is to become the largest power steering producer in China." said Mr.

Hanlin Chen, Chairman and Chief Executive Officer of China Automotive Systems.

Fourth Quarter 2006:

Total net sales for the fourth quarter of 2006 was $27.7 million as

compared with $18.6 million reported in the same period for 2005 and $22.4

million for the third quarter of 2006. This reflects 48.9% year-over-year

growth and 23.5% quarter-over-quarter growth, respectively.

Gross profit for the fourth quarter of 2006 increased to $8.6 million,

compared with $6.0 million reported in the same period for 2005 and $8.1

million for the third quarter of 2006, reflecting a 43.6% increase year-over-

year and a 5.3% quarter-over-quarter growth, respectively. Operating income

for the fourth quarter of 2006 was $3.6 million, compared with $2.3 million

reported in the same period of 2005 and $ 3.4 million for the third quarter of

2006, reflecting a 59.3% year-over-year growth and a 5.9% quarter-over-quarter

growth respectively.

Net income for the fourth quarter of 2006 was $1.4 million, or $0.06 per

diluted share as compared with $0.87 million, or $0.04 per diluted share in

the same period a year ago and $1.5 million, or $0.07 per diluted share, for

the third quarter of 2006. The net income was affected by a yearly adjustment

to depreciation which normally occurs in the fourth quarter, as well as

compensation related to an employee bonus program.

Fiscal Year 2006:

Increase

2006 2005 (Decrease)

Amount Amount Amount Percent

($m) ($m) ($m) age

Steering gears for

commercial vehicles 25.14 17.53 7.60 43.3 %

Steering gears for

passenger vehicles 60.25 40.04 20.20 50.5 %

Steering pumps 10.22 5.99 4.23 70.6 %

Others 0.16 - 0.16 -

Total Net sales 95.77 63.57 32.19 50.6 %

Net Income 4.81 3.32 1.50 45.1 %

Diluted earnings per share $0.21 $0.15 $0.06 40.0 %

Gross profit for the full year 2006 increased to $32.9 million, compared

with $22.5 million for the full year 2005, reflecting a 46.5% year-over-year

growth. Operating income for the full year 2006 was $12.8 million, compared

with $8.4 million for the full year 2005, reflecting a 52.3% year-over-year

growth.

Total cash and cash equivalents as of December 31, 2006 totaled $27.4

million as compared to $12.4 million as of December 31, 2005. Stockholder's

equity increased to $53.4 million as of December 31, 2006 from $36.9 million

as of December 31, 2005.

Key Establishments in 2006:

On May 4, 2006, China Automotive Systems announced that its wholly-owned

subsidiary, Great Genesis, entered 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, to focus on the R&D and manufacturing of power steering systems and

components.

The Chery Auto joint venture, with a total investment of approximately $6

million, is based in Wuhu, Anhui near Chery Auto's headquarters. China

Automotive Systems and Chery Auto have a 77.3% and 22.7% share, respectively,

in the joint venture. Upon the completion of the construction of the facility

in the third quarter of 2007, the total production capacity is estimated to

reach 300,000 sets of power steering systems and components annually. Most

products of the joint venture will be supplied to Chery Auto. With the new

facility in Wuhu, China Automotive Systems will also extend sales to China's

eastern market.

On June 29, 2006, China Automotive Systems announced the establishment of

a joint venture to manufacture electric power steering (''EPS'') systems and

components. This EPS joint venture, with registered capital of $6 million, is

based in Wuhan city, Hubei, one of the key auto manufacturing bases in China.

The EPS joint venture, 85% owned by China Automotive Systems, is expected to

commence production in the fourth quarter of 2007 and reach its full capacity

of 300,000 sets of electric power steering systems and components in 2011.

While global automakers are moving toward EPS in their new vehicles, a need

for EPS in the Chinese market is also emerging. EPS systems are attractive for

a variety of reasons, including lower fuel consumption, environmental

friendliness and higher profit margins as compared to hydraulic platforms.

Mr. Hanlin Chen said, "The establishment of the Chery Auto and EPS joint

ventures will help strengthen our market position, broaden our product

offerings, expand our production capacity and create a new competitive

advantage for us in the marketplace.''

Recent Development:

On February 6, 2007, the Company announced the establishment of its first

office in North America. The US based operation is based in Troy, Michigan and

will focus on market development, R&D and after sales service in North America.

The grand opening is expected to be in early May, 2007.

"The opening of our first office in the overseas market signifies our

ambition to enter the global market. We hope to leverage the resources

available in the US to upgrade our product quality, enhance new product R&D

and extend our leadership in the Chinese domestic market. Internationally, our

US presence will also enable us to shorten the communication gap between our

Chinese operation and US OEMs. Ultimately, we see tremendous technology

collaboration and growth opportunities between our new US office and our

existing Chinese operations." said Mr. Hanlin Chen, Chairman and Chief

Executive Officer of China Automotive Systems.

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.

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

Christopher Chu

The Global Consulting Group

Tel: +1-646-284-9426

Email: cchu@hfgcg.com

China Automotive Systems, Inc. and Subsidiaries

Consolidated Balance Sheets

December 31, 2006 and 2005

December 31,

2006 2005

ASSETS

Current assets:

Cash and cash equivalents $27,418,500 $12,374,944

Pledged cash deposits 3,484,335 1,185,660

Accounts and notes receivable, net,

including $1,770,933 and $1,829,075

from related parties at December 31,

2006 and 2005, net of an allowance for

doubtful accounts of $4,086,218 and

$2,856,025 at December 31, 2006 and

2005 57,234,383 41,580,320

Advance payments and other, including

$487,333 and $312,036 to related

parties at December 31, 2006 and 2005 837,014 1,029,892

Inventories 15,464,571 12,385,833

Total current assets $104,438,803 $68,556,649

Long-term Assets:

Property, plant and equipment, net $40,848,046 $39,796,033

Intangible assets, net 3,140,548 3,503,217

Other receivables, net, including

$738,510 and $3,966,509 from related

parties at December 31, 2006 and 2005,

net of an allowance for doubtful

accounts of $898,203 and $1,040,169 at

December 31, 2006 and 2005 966,715 6,503,629

Advance payment for property, plant

and equipment, including $488,873 and

$599,729 to related parties at

December 31, 2006 and 2005 2,640,708 1,096,121

Long-term investments 73,718 74,074

Total assets $152,108,538 $119,529,723

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Bank loans $15,384,615 $14,814,815

Accounts and notes payable, including

$640,405 and $383,578 to related

parties at December 31, 2006 and 2005 37,647,913 31,375,599

Customer deposits 146,171 157,919

Accrued payroll and related costs 1,506,251 1,418,093

Accrued expenses and other payables 11,078,186 5,191,617

Accrued pension costs 3,266,867 2,653,064

Taxes payable 5,914,362 4,172,212

Amounts due to shareholders/directors 358,065 766,642

Total current liabilities $75,302,430 $60,549,961

Long-term liabilities:

Advances payable 313,151 301,614

Total liabilities $75,615,581 $60,851,575

Minority interests $23,112,667 $21,751,043

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 - 23,851,581 shares

and 22,574,543 shares at December 31, 2006

and 2005, respectively 2,385 2,257

Additional paid-in capital 28,651,959 18,146,722

Retained earnings-

Appropriated 6,209,909 4,923,262

Unappropriated 16,047,237 12,522,180

Accumulated other comprehensive income 2,468,800 1,332,684

Total stockholders' equity $53,380,290 $36,927,105

Total liabilities and stockholders'

equity $152,108,538 $119,529,723

China Automotive Systems, Inc. and Subsidiaries

Consolidated Statements of Operations

Years Ended December 31, 2006, 2005 and 2004

2006 2005 2004

Income from continuing operations

Net product sales, including

$3,278,444, $2,290,129 and

$1,682,625 to related parties at

December 31, 2006, 2005 and 2004 $95,766,439 $63,572,301 $58,185,845

Cost of product sold, including

$2,850,283, $1,667,685 and

$1,703,179 purchased from related

parties at December 31, 2006, 2005

and 2004 62,856,625 41,105,478 35,042,352

Gross profit $32,909,814 $22,466,823 $23,143,493

Add: Gain on other sales 279,216 359,986 794,621

Less: Operating expenses

Selling expenses 7,772,068 5,804,678 3,865,154

General and administrative expenses 7,810,187 5,094,388 6,142,634

R&D expenses 1,066,050 966,782 1,518,512

Depreciation and amortization 3,776,003 2,577,944 848,009

Total Operating expenses 20,424,308 14,443,792 12,374,309

Income from operations $12,764,722 $8,383,017 $11,563,805

Add: Other income, net 94,257 150,809 856,939

Financial (expenses) (832,844) (1,166,167) (730,962)

Income before income taxes 12,026,135 7,367,659 11,689,782

Less: Income taxes 1,669,081 1,371,863 618,400

Income before minority interests 10,357,054 5,995,796 11,071,382

Less: Minority interests 5,545,350 2,680,318 4,182,454

Net income from continuing

operations $4,811,704 $3,315,478 $6,888,928

Net loss from discontinued

operations - - (21,591)

Net income $4,811,704 $3,315,478 $6,867,337

Net income per common share

Net income from continuing

operations -

Basic and diluted $0.21 $0.15 $0.30

Net income from discontinued

operations -

Basic and diluted 0.00 0.00 (0.00)

Total net income per common share

Basic and diluted $0.21 $0.15 $0.30

Weighted average number of common

shares outstanding -

Basic 23,198,113 22,574,543 22,574,543

Diluted 23,210,675 22,588,713 22,582,494

China Automotive Systems, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

Years Ended December 31, 2006, 2005 and 2004

2006 2005 2004

Net income $4,811,704 $3,315,478 $6,867,337

Other comprehensive income:

Foreign currency translation gain 1,136,116 1,329,624 7,210

Comprehensive income $5,947,820 $4,645,102 $6,874,547

Source: China Automotive Systems, Inc.
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