- Sales to the Chinese OEM market increased by 55.6% year-over-year and aluminum wheel shipment volume increased by 41.2% in the fourth quarter -
- 2017 revenue grew 25.8% to US$435.1 million -
ZHANGZHOU, China, March 15, 2018 /PRNewswire/ -- China Zenix Auto International Limited (NYSE: ZX) ("Zenix Auto" or "the Company"), the largest commercial vehicle wheel manufacturer in China in both the aftermarket and OEM market by sales volume, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2017.
Financial Highlights
Fourth Quarter 2017:
Full Year 2017:
Mr. Junqiu Gao, Deputy CEO and Chief Sales and Marketing Officer of Zenix Auto, commented, "We are pleased to report that we have returned to profitability in 2017 as we rode the wave of robust OEM truck sales and increased our market share with leading OEMs. With our growing economy-of-scale, and the increased adoption of tubeless and aluminum wheels, we are confident that 2018 will continue to be a solid year for us."
Mr. Martin Cheung, CFO of Zenix Auto, commented, "As the largest supplier in the commercial vehicle wheel segment, we continue to implement our product strategy of introducing advanced wheels and enhancing our leading production efficiencies. As a result, our operating margin improved in 2017. We will continue to monitor our cash flow management to strengthen our balance sheet."
2017 Fourth Quarter Results
Revenue for the fourth quarter ended December 31, 2017 was RMB736.3 million (US$113.2 million) from RMB 591.9 million for the fourth quarter of 2016. The increase in revenue on a year-over-year basis was mainly driven by increased demand for new trucks, especially heavy- and medium-duty trucks, due to the combined effects of the Government's anti-overloading policy and increased development of infrastructure and residential properties in China.
Aftermarket sales in China decreased by 5.2% year-over-year to RMB235.4 million (US$36.2 million) in the fourth quarter of 2017 from RMB248.4 million in the fourth quarter of 2016. Total unit sales in the aftermarket decreased by 27.3% year-over-year while prices increased. The aftermarket wheel segment remained weak as higher OEM truck sales negatively affected aftermarket replacement volume.
Sales to the Chinese OEM market increased by 55.6% year-over-year to RMB397.9 million (US$61.2 million) in the fourth quarter of 2017 compared to RMB255.7 million in the same quarter of 2016. Total unit sales in the OEM market increased by 7.4% year-over-year as a result of continued truck sales growth, especially heavy- and medium-duty trucks, during the fourth quarter of 2017.
International sales increased by 17.2% year-over-year to RMB102.9 million (US$15.8 million) in the fourth quarter of 2017 compared to sales of RMB 87.8 million in the fourth quarter of 2016. Total unit volume in international sales decreased by 7.1% year-over-year in the fourth quarter of 2017 as weaker demand in the price sensitive regions such as Southeast Asia, negatively affected overall sales.
In the fourth quarter of 2017, domestic aftermarket sales, domestic OEM sales and international sales contributed 32.0%, 54.0% and 14.0% of revenue, respectively.
Sales of tubed steel wheels comprised 44.3% of 2017 fourth quarter revenue compared to 52.4% in the same quarter in 2016. Tubeless steel wheel sales represented 43.2% of 2017 fourth quarter revenue compared to 35.4% in the same quarter of 2016. Tubed and tubeless steel wheel sales remained the main sources of revenue for the Company. However, sales of aluminum wheels continued to increase and accounted for 8.1% of fourth quarter revenue as compared to 7.9% in the same quarter a year ago.
Fourth quarter gross profit increased by 22.1% to RMB108.5 million (US$16.7 million), compared to RMB 88.8 million in the same quarter in 2016. Gross margin was 14.7%, compared with 15.0% in the fourth quarter of 2016. The decrease in gross margin on a year-over-year basis was mainly driven by the significant price appreciation of raw materials, namely steel, which slightly outpaced Zenix Auto's wheel price increases.
Selling and distribution expenses decreased by 9.4% to RMB41.1 million (US$6.3 million) from RMB45.4 million in the fourth quarter of 2016. As a percentage of revenue, selling and distribution costs were reduced to 5.6% in the fourth quarter of 2017, compared to 7.7% in the same quarter a year ago.
Research and development ("R&D") expenses decreased by 34.1% to RMB15.5 million (US$2.4 million), compared to RMB23.5 million in the fourth quarter of 2016. R&D as a percentage of revenue was 2.1% in the fourth quarter of 2017, compared to 4.0% in same quarter of 2016.
Administrative expenses remained flat at RMB 34.4 million (US$5.3 million) from RMB34.4 million in the fourth quarter of 2016. However, as a percentage of revenue, administrative expenses were 4.7% in the fourth quarter of 2017, compared to 5.8% of revenue in the fourth quarter of 2016.
Net profit and total comprehensive income for the fourth quarter of 2017 was RMB9.5 million (US$1.5 million), compared to net loss and total comprehensive loss of RMB11.6 million in the same quarter of 2016.
Basic and diluted earnings per ADS in the fourth quarter of 2017 were RMB 0.18 (US$0.03) compared to basic and diluted loss per ADS of RMB0.23 in the same quarter of 2016.
In the fourth quarter of 2017, the Company recorded net cash outflows from operating activities of RMB41.8 million (US$6.4 million). Capital expenditures for the purchase of property, plant and equipment in the fourth quarter were RMB0.4 million (US$0.1 million).
During the fourth quarter of 2017 and 2016, the weighted average number of ordinary shares was 206.5 million and the weighted average number of ADSs was 51.6 million.
2017 Full Year Results
Revenue for the year ended December 31, 2017 grew 25.8% to RMB2,831.0 million (US$435.1 million) compared with RMB2,249.5 million in 2016.
Aftermarket sales decreased by 10.9% to RMB909.9 million (US$139.9 million) in 2017 and represented 32.1% of total revenue. Sales to the Chinese OEM market increased by 78.9% to RMB1,533.0 million (US$235.6 million) and represented 54.2% of total revenue. International sales increased by 4.4% to RMB388.0 million (US$ 59.6 million) compared to last year and represented 13.7% of total revenue.
Tubed steel wheel sales in 2017 accounted for 45.4% of revenue compared with 54.6% in 2016. Tubeless steel wheel sales accounted for 43.9% of revenue compared with 36.4% in 2016. With the increase in market acceptance, aluminum wheel sales accounted for 6.8% of revenue in 2017 compared with 4.6% in 2016.
Gross profit for year 2017 was RMB381.6 million (US$58.6 million), compared with RMB 387.5 million in 2016. Gross margin was 13.5% in 2017 as compared to 17.2% in 2016.
Net profit and total comprehensive income for full year 2017 was RMB9.1 million (US$1.4 million), compared with net loss and total comprehensive loss of RMB25.9 million in 2016. Basic and diluted earnings per ADS for the full year ended December 31, 2017 were RMB0.18 (US$0.03) as compared to basic and diluted loss per ADS of RMB0.50 in 2016.
As of December 31, 2017, Zenix Auto had bank balances and cash of RMB751.6 million (US$115.5 million) and fixed bank deposits with a maturity period over three months of RMB290.0 million (US$44.6 million). Total equity attributable to owners of the Company was RMB2,546.6 million (US$391.4 million).
For the year ended December 31, 2017, the Company recorded cash outflows from operating activities of RMB91.2 million (US$14.0 million). Capital expenditures for the purchase of property, plant and equipment were RMB35.6 million (US$5.5 million).
Conference Call Information
The Company will host a conference call on Thursday, March 15, 2018 at 8:00 a.m. ET/ 8:00 p.m. Beijing Time. Interested parties may participate in the conference call by dialing +1-877-407-0782 (U.S. Toll Free) or +1-201-689-8567 (International). Please dial in five minutes before the call start time and ask to be connected to the "China Zenix Auto" conference call.
A replay will be available shortly after the conclusion of the conference call through April 15, 2018, at 8:00 a.m. ET. Interested parties may access the replay by dialing +1-877-481-4010 (U.S. Toll Free) or +1-919-882-2331 (International) and using Conference ID 26060 to access the replay.
Exchange Rate Information
The United States dollar (US$) amounts disclosed in this press release are presented solely for the convenience of the reader. All translations from RMB to U.S. dollars are made at a rate of RMB6.5063 to US$1.00, the effective noon buying rate as of December 31, 2017 in The City of New York, for cable transfers of RMB as set forth in the H.10 weekly statistical release of the Federal Reserve Board. The percentages stated are calculated based on RMB amounts.
About China Zenix Auto International Limited
China Zenix Auto International Limited is the largest commercial vehicle wheel manufacturer in China in both the aftermarket and OEM market by sales volume. The Company offers more than 798 series of aluminum wheels, tubed steel wheels, tubeless steel wheels, and off-road steel wheels in the aftermarket and OEM markets in China and internationally. The Company's customers include large PRC commercial vehicle manufacturers, and it also exports products to over 80 distributors in more than 28 countries worldwide. With six large, strategically located manufacturing facilities in multiple regions across China, the Company has a designed annual production capacity of approximately 15.5 million units of steel and aluminum wheels as of December 31, 2017. For more information, please visit: www.zenixauto.com/en.
Safe Harbor
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. The Company may make written or oral forward-looking statements in its periodic reports to the SEC, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. Further information regarding these risks is included in our filings with the SEC. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of the press release, and the Company undertakes no duty to update such information, except as required under applicable law.
For more information, please contact
Kevin Theiss
Awaken Advisors
Tel: +1-(212) 521-4050
Email: Kevin.Theiss@awakenlab.com
- tables follow -
| China Zenix Auto International Limited |
|||||||
| Unaudited Condensed Consolidated Statements of Profit or Loss and Other Comprehensive |
|||||||
| For the three months ended December 31, 2017 and 2016 |
|||||||
| (RMB and US$ amounts expressed in thousands, except number of shares and ADSs and |
|||||||
| 2016 Q4 |
2017 Q4 |
2017 Q4 |
|||||
| RMB' 000 |
RMB' 000 |
US$' 000 |
|||||
| Revenue |
591,888 |
736,284 |
113,165 |
||||
| Cost of sales |
(503,068) |
(627,815) |
(96,493) |
||||
| Gross profit |
88,820 |
108,469 |
16,672 |
||||
| Other operating income |
4,978 |
2,229 |
343 |
||||
| Net exchange gain(loss) |
1,602 |
(1,181) |
(182) |
||||
| Selling and distribution costs |
(45,432) |
(41,147) |
(6,324) |
||||
| Research and development expenses |
(23,528) |
(15,503) |
(2,383) |
||||
| Administrative expenses |
(34,423) |
(34,434) |
(5,292) |
||||
| Finance costs |
(5,344) |
(5,423) |
(833) |
||||
| (Loss) Profit before taxation |
(13,327) |
13,010 |
2,000 |
||||
| Income tax credit (expense) |
1,700 |
(3,513) |
(540) |
||||
| (Loss) Profit and total |
(11,627) |
9,497 |
1,460 |
||||
| (Loss) Earnings per share |
|||||||
| Basic |
(0.06) |
0.05 |
0.01 |
||||
| Diluted |
(0.06) |
0.05 |
0.01 |
||||
| (Loss) Earnings per ADS |
|||||||
| Basic |
(0.23) |
0.18 |
0.03 |
||||
| Diluted |
(0.23) |
0.18 |
0.03 |
||||
| Shares |
206,500,000 |
206,500,000 |
206,500,000 |
||||
| ADSs |
51,625,000 |
51,625,000 |
51,625,000 |
||||
| China Zenix Auto International Limited |
||||||
| Unaudited Condensed Consolidated Statements of Profit or Loss and Other Comprehensive |
||||||
| For the years ended December 31, 2017 and 2016 |
||||||
| (RMB and US$ amounts expressed in thousands, except number of shares and ADSs and |
||||||
| 2016 |
2017 |
2017 |
||||
| RMB' 000 |
RMB' 000 |
US$' 000 |
||||
| Revenue |
2,249,533 |
2,830,987 |
435,115 |
|||
| Cost of sales |
(1,862,017) |
(2,449,399) |
(376,466) |
|||
| Gross profit |
387,516 |
381,588 |
58,649 |
|||
| Other operating income |
11,680 |
21,171 |
3,254 |
|||
| Net exchange gain(loss) |
2,546 |
(3,521) |
(541) |
|||
| Selling and distribution costs |
(181,911) |
(173,800) |
(26,713) |
|||
| Research and development expenses |
(84,639) |
(57,419) |
(8,825) |
|||
| Administrative expenses |
(139,377) |
(130,203) |
(20,012) |
|||
| Finance costs |
(21,387) |
(21,375) |
(3,285) |
|||
| (Loss) Profit before taxation |
(25,572) |
16,441 |
2,527 |
|||
| Income tax expense |
(352) |
(7,389) |
(1,136) |
|||
| (Loss) Profit and total |
(25,924) |
9,052 |
1,391 |
|||
| (Loss) Earnings per share |
||||||
| Basic |
(0.13) |
0.04 |
0.01 |
|||
| Diluted |
(0.13) |
0.04 |
0.01 |
|||
| (Loss) Earnings per ADS |
||||||
| Basic |
(0.50) |
0.18 |
0.03 |
|||
| Diluted |
(0.50) |
0.18 |
0.03 |
|||
| Shares |
206,500,000 |
206,500,000 |
206,500,000 |
|||
| ADSs |
51,625,000 |
51,625,000 |
51,625,000 |
|||
| China Zenix Auto International Limited |
|||||||
| Unaudited Consolidated Statements of Financial Position |
|||||||
| (RMB and US$ amounts expressed in thousands) |
|||||||
| December 31 |
December 31 |
December 31 |
|||||
| RMB'000 |
RMB'000 |
US$' 000 |
|||||
| ASSETS |
|||||||
| Current Assets |
|||||||
| Inventories |
138,740 |
178,034 |
27,363 |
||||
| Trade and other receivables and |
695,856 |
900,162 |
138,352 |
||||
| Prepaid lease payments |
9,425 |
9,425 |
1,449 |
||||
| Pledged bank deposits |
32,100 |
35,200 |
5,410 |
||||
| Fixed bank deposits with maturity |
290,000 |
290,000 |
44,572 |
||||
| Bank balances and cash |
896,799 |
751,612 |
115,521 |
||||
| Total current assets |
2,062,920 |
2,164,433 |
332,667 |
||||
| Non-Current Assets |
|||||||
| Property, plant and equipment |
1,379,287 |
1,272,774 |
195,622 |
||||
| Prepaid lease payments |
376,449 |
367,024 |
56,411 |
||||
| Deferred tax assets |
23,836 |
25,500 |
3,919 |
||||
| Intangible assets |
17,000 |
17,000 |
2,613 |
||||
| Total non-current assets |
1,796,572 |
1,682,298 |
258,565 |
||||
| Total assets |
3,859,492 |
3,846,731 |
591,232 |
||||
| EQUITY AND LIABILITIES |
|||||||
| Current Liabilities |
|||||||
| Trade and other payables and accruals |
668,633 |
635,425 |
97,663 |
||||
| Amount due to a shareholder |
1,398 |
8,742 |
1,344 |
||||
| Taxation payable |
109 |
3,573 |
549 |
||||
| Short-term bank borrowings |
558,000 |
558,000 |
85,763 |
||||
| Total current liabilities |
1,228,140 |
1,205,740 |
185,319 |
||||
| Deferred tax liabilities |
85,286 |
86,670 |
13,321 |
||||
| Deferred income |
8,496 |
7,699 |
1,183 |
||||
| Total non-current liabilities |
93,782 |
94,369 |
14,504 |
||||
| Total liabilities |
1,321,922 |
1,300,109 |
199,823 |
||||
| EQUITY |
|||||||
| Share capital |
136 |
136 |
21 |
||||
| Paid in capital |
392,076 |
392,076 |
60,261 |
||||
| Reserves |
2,145,358 |
2,154,410 |
331,127 |
||||
| Total equity attributable to owners |
2,537,570 |
2,546,622 |
391,409 |
||||
| Total equity and liabilities |
3,859,492 |
3,846,731 |
591,232 |
||||
| China Zenix Auto International Limited |
||||
| Unaudited Consolidated Statement of Cash Flows |
||||
| For the year ended December 31, 2017 |
||||
| (RMB and US$ amounts expressed in thousands) |
||||
| OPERATING ACTIVITIES |
Year Ended December 31, 2017 |
|||
| RMB' 000 |
US$' 000 |
|||
| Profit before taxation |
16,441 |
2,527 |
||
| Adjustments for: |
||||
| Amortization of prepaid lease payments |
9,425 |
1,449 |
||
| Depreciation of property, plant and equipment |
147,959 |
22,741 |
||
| Release of deferred income |
(797) |
(122) |
||
| Finance costs |
21,375 |
3,285 |
||
| Loss on disposal of property, plant and equipment |
31 |
5 |
||
| Interest income |
(11,020) |
(1,694) |
||
| Operating cash flows before movements in working capital |
183,414 |
28,191 |
||
| Increase in inventories |
(39,294) |
(6,039) |
||
| Increase in trade and other receivables and prepayments |
(206,950) |
(31,807) |
||
| Decrease in trade and other payables and accruals |
(36,148) |
(5,556) |
||
| Cash used in operations |
(98,978) |
(15,211) |
||
| Interest received |
11,040 |
1,697 |
||
| PRC income tax paid |
(3,274) |
(503) |
||
| NET CASH USED IN OPERATING ACTIVITIES |
(91,212) |
(14,017) |
||
| INVESTING ACTIVITIES |
||||
| Purchase of property, plant and equipment |
(35,617) |
(5,475) |
||
| Withdrawal of pledged bank deposits |
4,000 |
614 |
||
| Placement of pledged bank deposits |
(7,100) |
(1,091) |
||
| Proceeds on disposal of property, plant and equipment |
238 |
37 |
||
| Placement of fixed bank deposits with maturity periods |
(580,000) |
(89,144) |
||
| Withdrawal of fixed bank deposits with maturity periods |
580,000 |
89,144 |
||
| NET CASH USED IN INVESTING ACTIVITIES |
(38,479) |
(5,915) |
||
| FINANCING ACTIVITIES |
||||
| New bank borrowings raised |
558,000 |
85,763 |
||
| Repayment of bank borrowings |
(558,000) |
(85,763) |
||
| Interest paid |
(24,533) |
(3,771) |
||
| Advance from a shareholder |
7,344 |
1,129 |
||
| NET CASH USED IN FINANCING ACTIVITIES |
(17,189) |
(2,642) |
||
| NET DECREASE IN CASH AND CASH EQUIVALENTS |
(146,880) |
(22,574) |
||
| Cash and cash equivalents at beginning of the year |
896,799 |
137,835 |
||
| Effect of foreign exchange rate changes |
1,693 |
260 |
||
| Cash and cash equivalents at end of the year |
751,612 |
115,521 |
||
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