China Zenix Auto International Limited Reports Financial Results for 2019 Second Quarter
ZHANGZHOU, China, Aug. 15, 2019 /PRNewswire/ -- China Zenix Auto International Limited (OTC: ZXAIY) ("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 second quarter ended June 30, 2019.
Financial Highlights
Second Quarter 2019:
- Revenue was RMB799.0 million (US$116.4 million), down 12.0% year-over-year;
- Sales to the Chinese OEM market decreased 16.3% year-over-year;
- Aftermarket sales increased by 0.4% year-over-year;
- Gross margin maintained at 12.2%;
- Profit and total comprehensive income for the period was RMB 10.2 million (US$1.5 million) compared with a loss and total comprehensive loss in the second quarter of 2018.
First Six Months of 2019
- Revenue was RMB1,468.3 million (US$213.9 million), a decrease of 14.8% year-over-year compared with RMB1,723.8 million in the first six months of 2018;
- Tubeless steel wheel sales decreased by 13.7% year-over-year;
- Sales of aluminum wheels decreased by 13.8% year-over-year;
- Gross margin was maintained at 12.2%;
- Net profit and total comprehensive income for the period was RMB5.7 million (US$0.8 million) with basic and diluted earnings per American Depositary Share ("ADS") of RMB0.11 (US$0.02);
- Bank balances and cash, pledged bank deposits and fixed bank deposits with maturity period over three months totaled RMB1,245.4 million (US$181.4 million).
Mr. Junqiu Gao, Deputy CEO and Chief Sales and Marketing Officer of Zenix Auto, commented, "In the midst of the slowdown of Chinese economy, Chinese commercial vehicle production during the quarter consisted of a 1.8% decline in April 2019, an 8.5% decrease in May 2019, and a 17.5% decline in June of 2019 according to statistics from the China Association of Automobiles ("CAAM"). In addition, major parts of the country implemented the stricter National VI emission standard starting July 1, 2019, resulting in retailers slashing prices to accelerate the sales of National V-compliant vehicles in their inventory before the new standard became law. This reduced production affected our OEM sales during the 2019 second quarter."
Mr. Martin Cheung, CFO of Zenix Auto, commented, "We were able to raise selling prices resulting in higher gross profit and margin in the second quarter of 2019. Our profit and total comprehensive income for the period was RMB 10.2 million (US$1.5 million) versus a loss in the second quarter in 2018. We ended the second quarter with bank balances and cash, pledged bank deposits and fixed bank deposits with maturity period over three months of RMB1,245.4 million (US$181.4 million). We will protect and enhance our resources to meet our strategic goals."
2019 Second Quarter Results
Revenue for the second quarter was RMB799.0 million (US$116.4 million) from RMB907.6 million for the second quarter of 2018. The 12.0% decrease in revenue on a year-over-year basis was mainly due to the weaker demand from the OEM sector in China and international sales.
Sales to the Chinese OEM market decreased by 16.3% year-over-year to RMB444.5 million (US$64.7 million) in the second quarter of 2019 compared to RMB530.8 million in the same quarter of 2018. Total unit sales in the OEM market decreased by 20.6% year-over-year during the second quarter of 2019.
Aftermarket sales in China increased by 0.4% year-over-year to RMB269.1 million (US$39.2 million) in the second quarter of 2019 from RMB268.2 million in the second quarter of 2018. Total unit sales in the aftermarket decreased by 6.1% year-over-year as the softer economy affected the logistics sector.
International sales decreased by 21.4% year-over-year to RMB85.4 million (US$12.4 million) in the second quarter of 2019 compared to sales of RMB108.7 million in the second quarter of 2018. Total international unit sales decreased by 28.0% year-over-year in the second quarter of 2019 mainly due to continued weak demand in Southeastern Asian countries due to higher material costs.
In the second quarter of 2019, domestic OEM sales, domestic aftermarket sales and international sales contributed 55.6%, 33.7% and 10.7% of revenue, respectively.
Sales of tubed steel wheels comprised 46.6% of 2019 second quarter revenue compared to 47.2% in the same quarter in 2018. Tubeless steel wheel sales represented 41.4% of 2019 second quarter revenue compared to 42.4% in the same quarter of 2018. While tubed and tubeless steel wheel sales remain the main sources of revenue for the Company, sales of aluminum wheels accounted for 8.2% of second quarter revenue as compared to 7.5% in the same quarter a year ago.
Second quarter gross profit increased by 16.1% to RMB97.7 million (US$14.2 million), compared to RMB84.2 million in the same quarter in 2018. Gross margin was 12.2%, compared with 9.3% in the second quarter of 2018. The increase in gross margin on a year-over-year basis was mainly due to the Company raised selling prices during the second quarter while raw material costs remained stable.
Selling and distribution expenses decreased by 10.3% to RMB43.9 million (US$6.4 million) from RMB48.9 million in the second quarter of 2018. The decrease in selling and distribution costs was primarily due to lower transportation expenses associated with lower sales volume. As a percentage of revenue, selling and distribution costs were 5.5% in the second quarter of 2019, compared to 5.4% in the same quarter a year ago.
Research and development ("R&D") expenses increased by 8.4% to RMB14.9 million (US$2.2 million), compared to RMB13.7 million in the second quarter of 2018. R&D as a percentage of revenue was 1.9% in the second quarter of 2019, compared to 1.5% in the same quarter a year ago.
Administrative expenses decreased by 12.9% to RMB26.6 million (US$3.9 million) from RMB30.5 million in the second quarter of 2018. As a percentage of revenue, administrative expenses were 3.3%, compared to 3.4% of revenue in the second quarter of 2018.
Net profit and total comprehensive income were RMB10.2 million (US$1.5 million) in the second quarter of 2019 compared to a net loss and total comprehensive loss of RMB5.8 million for the second quarter of 2018.
Basic and diluted earnings per ADS were RMB0.20 (US$0.03) in the second quarter of 2019 compared to basic and diluted loss per ADS of RMB0.11 in the second quarter of 2018.
In the second quarter of 2019, the Company recorded net cash outflows from operating activities of RMB47.3 million (US$6.9 million). Days Sales Outstanding (DSO) was at 63 days in the second quarter of 2019, in comparison with 54 days during the full year of 2018. The Company did not incur meaningful capital expenditures for the purchase of property, plant and equipment in the second quarter of 2019.
During the second quarter of 2019 and 2018, the weighted average number of ordinary shares was 206.5 million and the weighted average number of ADSs was 51.6 million.
2019 First Six Months Results
Revenue for the first six months ended June 30, 2019 was RMB1,468.3 million (US$213.9 million) compared with RMB1,723.8 million in the first six months of 2018.
Sales to the Chinese OEM market decreased by 20.2% year-over-year to RMB794.8 million (US$115.8 million) and represented 54.1% of revenue. Aftermarket sales decreased by 2.4% year-over-year to RMB509.7 million (US$74.2 million) in the first six months of 2019 and represented 34.7% of total six-month revenue. International sales decreased by 20.4% year-over-year to RMB163.8 million (US$23.9 million) compared with the same period last year and represented 11.2% of revenue.
Tubed steel wheel sales for the first six months ended June 30, 2019 decreased by 17.9% compared with the same period in 2018 and accounted for 44.8% of revenue. Tubeless steel wheel sales decreased by 13.7% from the same period a year ago and accounted for 42.4% of revenue. Aluminum wheel sales decreased 13.8% from the same period a year ago and accounted for 8.5% of revenue. Construction equipment wheel sales increased by 39.0% and accounted for 2.3% of revenue.
Gross profit for the first six months ended June 30, 2019 was RMB178.9 million (US$26.1 million) compared with RMB210.1 million during the same period in 2018, up 14.9% year-over-year. Gross margin was 12.2% compared with 12.2% in the same period last year.
Net profit and total comprehensive income for the first six months ended June 30, 2019 was RMB5.7 million (US$0.8 million) compared with RMB20.3 million during the same period in 2018.
Basic and diluted earnings per ADS for the first six months ended June 30, 2019 were RMB0.11 (US$0.02), compared with RMB0.39 during the same period in 2018.
As of June 30, 2019, Zenix Auto had bank balances and cash of RMB924.4 million (US$134.7 million) and fixed bank deposits with a maturity period over three months of RMB290.0 million (US$42.2 million). Pledged bank deposits were RMB31.0 million (US$4.5 million). Total bank borrowings were RMB558.0 million (US$81.3 million). Total equity attributable to owners of the Company was RMB2,544.4 million (US$370.6 million).
Conference Call Information
The Company will host a conference call, to be simultaneously webcast, on Thursday, August 15, 2019 at 8:00 a.m. ET/ 8:00 p.m. Beijing Time. Interested parties may participate in the conference call by dialing +1-877-407-0782 (U.S. Toll Free) or +1-201-689-8567 (International). Please dial in five minutes before the call start time and ask to be connected to the "China Zenix Auto" conference call.
A replay will be available shortly after the conclusion of the conference call through September 15, 2019, at 8:00 a.m. ET. Interested parties may access the replay by dialing +1-877-481-4010 (U.S. Toll Free) or +1-919-882-2331 (International) and using Conference ID 51554 to access the replay.
Exchange Rate Information
The United States dollar (US$) 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 RMB6.8650 to US$1.00, the effective noon buying rate as of June 28, 2019 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 834 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 78 distributors in more than 30 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 June 30, 2019. 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
Investor Relations
Awaken Advisors
Tel: +1-(212) 521-4050
Email: [email protected]
- tables follow -
China Zenix Auto International Limited |
|||||
Unaudited Condensed Consolidated Statements of Profit or Loss and Other Comprehensive Income |
|||||
For the three months ended June 30, 2019 and 2018 |
|||||
(RMB and US$ amounts expressed in thousands, except number of shares and per share data) |
|||||
2018 Q2 |
2019 Q2 |
2019 Q2 |
|||
RMB' 000 |
RMB' 000 |
US$' 000 |
|||
Revenue |
907,621 |
798,998 |
116,387 |
||
Cost of sales |
(823,407) |
(701,253) |
(102,149) |
||
Gross profit |
84,214 |
97,745 |
14,238 |
||
Other operating income |
4,003 |
6,038 |
880 |
||
Net exchange gain |
2,484 |
1,253 |
183 |
||
Selling and distribution costs |
(48,934) |
(43,917) |
(6,397) |
||
Research and development expenses |
(13,729) |
(14,881) |
(2,168) |
||
Administrative expenses |
(30,499) |
(26,553) |
(3,868) |
||
Finance costs |
(5,790) |
(6,136) |
(894) |
||
(Loss) Profit before taxation |
(8,251) |
13,549 |
1,974 |
||
Income tax expense |
2,415 |
(3,319) |
(483) |
||
(Loss) Profit and total |
(5,836) |
10,230 |
1,490 |
||
(Loss) Earnings per share |
|||||
Basic |
(0.03) |
0.05 |
0.01 |
||
Diluted |
(0.03) |
0.05 |
0.01 |
||
(Loss) Earnings per ADS |
|||||
Basic |
(0.11) |
0.20 |
0.03 |
||
Diluted |
(0.11) |
0.20 |
0.03 |
||
Shares |
206,500,000 |
206,500,000 |
206,500,000 |
||
ADSs |
51,625,000 |
51,625,000 |
51,625,000 |
||
China Zenix Auto International Limited |
|||||
Unaudited Condensed Consolidated Statements of Profit or Loss and Other Comprehensive Income |
|||||
For the six months ended June 30, 2019 and 2018 |
|||||
(RMB and US$ amounts expressed in thousands, except number of shares and per share data) |
|||||
2018 |
2019 |
2019 |
|||
RMB' 000 |
RMB' 000 |
US$' 000 |
|||
Revenue |
1,723,828 |
1,468,348 |
213,889 |
||
Cost of sales |
(1,513,701) |
(1,289,450) |
(187,830) |
||
Gross profit |
210,127 |
178,898 |
26,059 |
||
Other operating income |
8,177 |
8,944 |
1,303 |
||
Net exchange gain(loss) |
27 |
(7) |
(1) |
||
Selling and distribution costs |
(93,949) |
(83,386) |
(12,147) |
||
Research and development expenses |
(26,584) |
(28,216) |
(4,110) |
||
Administrative expenses |
(61,206) |
(55,177) |
(8,037) |
||
Finance costs |
(11,460) |
(12,028) |
(1,752) |
||
Profit before taxation |
25,132 |
9,028 |
1,315 |
||
Income tax expense |
(4,820) |
(3,297) |
(480) |
||
Profit and total |
20,312 |
5,731 |
835 |
||
Earnings per share |
|||||
Basic |
0.10 |
0.03 |
0.00 |
||
Diluted |
0.10 |
0.03 |
0.00 |
||
Earnings per ADS |
|||||
Basic |
0.39 |
0.11 |
0.02 |
||
Diluted |
0.39 |
0.11 |
0.02 |
||
Shares |
206,500,000 |
206,500,000 |
206,500,000 |
||
ADSs |
51,625,000 |
51,625,000 |
51,625,000 |
||
China Zenix Auto International Limited |
|||||
Unaudited Condensed Consolidated Statements of Financial Position |
|||||
(RMB and US$ amounts expressed in thousands) |
|||||
December 31, |
June 30, |
June 30, |
|||
RMB'000 |
RMB'000 |
US$' 000 |
|||
ASSETS |
|||||
Current Assets |
|||||
Inventories |
172,111 |
217,504 |
31,683 |
||
Trade and other receivables and prepayments |
776,473 |
879,707 |
128,144 |
||
Prepaid lease payments |
9,425 |
9,425 |
1,373 |
||
Pledged bank deposits |
33,500 |
31,000 |
4,516 |
||
Fixed bank deposits with maturity period over |
290,000 |
290,000 |
42,243 |
||
Bank balances and cash |
933,250 |
924,409 |
134,655 |
||
Total current assets |
2,214,759 |
2,352,045 |
342,614 |
||
Non-Current Assets |
|||||
Property, plant and equipment |
1,099,003 |
1,031,257 |
150,220 |
||
Prepaid lease payments |
357,599 |
352,886 |
51,404 |
||
Deferred tax assets |
40,272 |
42,517 |
6,193 |
||
Intangible assets |
17,000 |
17,000 |
2,476 |
||
Total non-current assets |
1,513,874 |
1,443,600 |
210, 293 |
||
Total assets |
3,728,633 |
3,795,705 |
552,907 |
||
EQUITY AND LIABILITIES |
|||||
Current Liabilities |
|||||
Trade and other payables and accruals |
611,463 |
586,891 |
85,490 |
||
Amount due to a shareholder |
9,911 |
10,558 |
1,538 |
||
Taxation payable |
2,477 |
3,687 |
537 |
||
Bank borrowings |
473,000 |
558,000 |
81,282 |
||
Total current liabilities |
1,096,851 |
1,159,136 |
168,847 |
||
Deferred tax liabilities |
86,239 |
85,694 |
12,483 |
||
Deferred income |
6,903 |
6,504 |
947 |
||
Total non-current liabilities |
93,142 |
92,198 |
13,430 |
||
Total liabilities |
1,189,993 |
1,251,334 |
182,277 |
||
EQUITY |
|||||
Share capital |
136 |
136 |
20 |
||
Paid in capital |
392,076 |
392,076 |
57,112 |
||
Reserves |
2,146,428 |
2,152,159 |
313,497 |
||
Total equity attributable to owners of the |
2,538,640 |
2,544,371 |
370,629 |
||
Total equity and liabilities |
3,728,633 |
3,795,705 |
552,907 |
||
China Zenix Auto International Limited |
||||
Unaudited Condensed Consolidated Statement of Cash Flows |
||||
For the three months ended June 30, 2019 |
||||
(RMB and US$ amounts expressed in thousands) |
||||
Three Months Ended |
||||
June 30, 2019 |
||||
OPERATING ACTIVITIES |
RMB' 000 |
US$' 000 |
||
Profit before taxation |
13,549 |
1,974 |
||
Adjustments for: |
||||
Amortization of prepaid lease payments |
2,357 |
343 |
||
Depreciation of property plant and equipment |
33,847 |
4,930 |
||
Release of deferred income |
(200) |
(29) |
||
Finance costs |
6,136 |
894 |
||
Loss on disposal of property, plant and equipment |
1 |
- |
||
Interest income |
(3,612) |
(526) |
||
Operating cash flows before movements in working capital |
52,078 |
7,586 |
||
Decrease in inventories |
10,892 |
1,587 |
||
Decrease in trade and other receivables and prepayments |
(106,752) |
(15,549) |
||
Decrease in trade and other payables and accruals |
(3,568) |
(520) |
||
Cash used in operations |
(47,350) |
(6,896) |
||
Interest received |
2,865 |
417 |
||
PRC income tax paid |
(2,766) |
(403) |
||
NET CASH USED IN OPERATING ACTIVITIES |
(47,251) |
(6,882) |
||
INVESTING ACTIVITIES |
||||
Purchase of property, plant and equipment |
(384) |
(56) |
||
Placement of pledged bank deposits |
(332,500) |
(48,434) |
||
Withdrawal of pledged bank deposits |
333,400 |
48,565 |
||
Proceeds on disposal of property, plant and equipment |
1 |
- |
||
Placement of fixed bank deposits with maturity periods over |
(50,000) |
(7,283) |
||
Withdrawal of fixed bank deposits with maturity periods over |
50,000 |
7,283 |
||
NET CASH FROM INVESTING ACTIVITIES |
517 |
75 |
||
FINANCING ACTIVITIES |
||||
Interest paid |
(6,203) |
(904) |
||
Advance from a shareholder |
634 |
92 |
||
NET CASH USED IN FINANCING ACTIVITIES |
(5,569) |
(812) |
||
NET DECREASE IN CASH AND CASH EQUIVALENTS |
(52,303) |
(7,619) |
||
Cash and cash equivalents at beginning of the period |
977,239 |
142,351 |
||
Effect of foreign exchange rate changes |
(527) |
(77) |
||
Cash and cash equivalents at end of the period |
924,409 |
134,655 |
||
China Zenix Auto International Limited |
||||
Unaudited Condensed Consolidated Statement of Cash Flows |
||||
For the six months ended June 30, 2019 |
||||
(RMB and US$ amounts expressed in thousands) |
||||
Six Months Ended |
||||
June 30, 2019 |
||||
OPERATING ACTIVITIES |
RMB' 000 |
US$' 000 |
||
Profit before taxation |
9,028 |
1,315 |
||
Adjustments for: |
||||
Amortization of prepaid lease payments |
4,713 |
687 |
||
Depreciation of property plant and equipment |
68,079 |
9,917 |
||
Release of deferred income |
(399) |
(58) |
||
Finance costs |
12,028 |
1,752 |
||
Loss on disposal of property, plant and equipment |
2 |
- |
||
Interest income |
(5,957) |
(868) |
||
Operating cash flows before movements in working capital |
87,494 |
12,745 |
||
Increase in inventories |
(45,393) |
(6,612) |
||
Decrease in trade and other receivables and prepayments |
(103,043) |
(15,010) |
||
Decrease in trade and other payables and accruals |
(24,618) |
(3,586) |
||
Cash generated from operations |
(85,560) |
(12,463) |
||
Interest received |
5,974 |
870 |
||
PRC income tax paid |
(5,243) |
(764) |
||
NET CASH USED IN OPERATING ACTIVITIES |
(84,829) |
(12,357) |
||
INVESTING ACTIVITIES |
||||
Purchase of property, plant and equipment |
(384) |
(56) |
||
Placement of pledged bank deposits |
(332,500) |
(48,434) |
||
Withdrawal of pledged bank deposits |
335,000 |
48,798 |
||
Proceeds on disposal of property, plant and equipment |
49 |
7 |
||
Placement of fixed bank deposits with maturity periods over |
(290,000) |
(42,243) |
||
Withdrawal of fixed bank deposits with maturity periods over |
290,000 |
42,243 |
||
NET CASH FROM INVESTING ACTIVITIES |
2,165 |
315 |
||
FINANCING ACTIVITIES |
- |
|||
New bank borrowings raised |
340,000 |
49,527 |
||
Repayment of bank borrowings |
(255,000) |
(37,145) |
||
Interest paid |
(11,982) |
(1,745) |
||
Advance from a shareholder |
647 |
94 |
||
NET CASH FROM FINANCING ACTIVITIES |
73,665 |
10,731 |
||
NET DECREASE IN CASH AND CASH EQUIVALENTS |
(8,999) |
(1,311) |
||
Cash and cash equivalents at beginning of the period |
933,250 |
135,943 |
||
Effect of foreign exchange rate changes |
158 |
23 |
||
Cash and cash equivalents at end of the period |
924,409 |
134,655 |
||
SOURCE China Zenix Auto International Limited
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