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China Zenix Auto International Limited Reports 2016 Second Quarter Results

- Gross margin was 18.3% and cash flow from operations reached US$5.7 million in the second quarter -

Aug 18, 2016

ZHANGZHOU, China, Aug. 18, 2016 /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 second quarter ended June 30, 2016.                                                                                                           

Financial Highlights

Second Quarter 2016:

  • Revenue was RMB639.5 million (US$96.2 million) compared with RMB657.4 million in the second quarter of 2015;
  • Gross margin was 18.3% up from 14.0% in the second quarter of 2015;
  • Net profit and total comprehensive income for the period was RMB4.6 million (US$0.7 million) with earnings per American Depositary Share ("ADS") of RMB0.09 (US$0.01) compared with net loss and total comprehensive loss of RMB14.1 million with loss per ADS of RMB0.27 in the second quarter of 2015.

First Six Months of 2016

  • Revenue was RMB1,164.9 million (US$175.3 million) compared with RMB1,379.7 million in the first six months of 2015;
  • Gross margin of 18.7%;
  • Net profit and total comprehensive income for the period was RMB1.7 million (US$0.3 million) with earnings per ADS of RMB0.03 (US$0.01);
  • Net cash flow from operations was RMB116.6 million (US$17.5 million);
  • Bank balances and cash and fixed bank deposits with maturity period over three months totaled RMB1,165.2 million (US$175.3 million).

Mr. Junqiu Gao, Deputy CEO and Chief Sales and Marketing Officer of Zenix Auto, commented, "We are pleased that we returned to profitability in the second quarter. After a number of difficult quarters, our OEM sales regained growth and our gross margin continued to recover. While we await the gradual ramp-up of aluminum wheels sales, we remain optimistic on the long-term outlook of market opportunities."

Mr. Martin Cheung, CFO of Zenix Auto, commented, "We continued to maintain a strong balance sheet while implementing stringent cost controls and boosting efficiencies. Our ability to generate free cash-flow demonstrated that we are on our way to recovery. We believe that our improved financial condition strengthens our market leadership where many smaller players continue to struggle."

2016 Second Quarter Results          

Revenue for the second quarter ended June 30, 2016 was RMB639.5 million (US$96.2 million) from RMB657.4 million for the second quarter of 2015. The decline in revenue on a year-over-year basis was mainly due to weak aftermarket segment and international markets related to sluggish domestic and emerging market economies. The decline of total revenue was also attributable to the downward price adjustment in response to the lower raw material costs.

Aftermarket sales in China decreased by 4.1% year-over-year to RMB288.0 million (US$43.3 million) in the second quarter of 2016 from RMB300.3 million in the second quarter of 2015. Total unit sales in the aftermarket decreased by 3.7% year-over-year as a result of weak commercial vehicle transportation market.

Sales to the Chinese OEM market increased by 8.4% year-over-year to RMB245.5 million (US$36.9 million) in the second quarter of 2016 compared to RMB226.5 million in the same quarter of 2015. Total unit sales in the OEM market increased by 12.6% year-over-year during the second quarter of 2016. Overall OEM sales rose due to heavy-duty truck manufacturers increasing production in the second quarter of 2016.  

International sales decreased by 18.8% year-over-year to RMB106.1 million (US$16.0 million) in the second quarter of 2016 compared to sales of RMB130.6 million in the second quarter of 2015. Total unit sales in the international sales decreased by 8.4% year-over-year in the second quarter of 2016 mainly due to sluggish economies in Southeastern Asian countries including Thailand, Indonesia and Burma, which have weakened the demand from these markets.

In the second quarter of 2016, domestic aftermarket sales, domestic OEM sales and international sales contributed 45.0%, 38.4% and 16.6% of revenue, respectively.

Sales of tubed steel wheels comprised 56.2% of 2016 second quarter revenue compared to 57.6% in the same quarter in 2015. Tubeless steel wheel sales represented 36.3% of second quarter revenue compared to 36.9% in the same quarter of 2015. Tubed and tubeless steel wheel sales remain the main sources of revenue for the Company. However, sales of aluminum wheels increased and accounted for 2.8% of second quarter revenue as compared to nil in the same quarter a year ago.

Second quarter gross profit increased by 27.0% to RMB117.0 million (US$17.6 million), compared to RMB92.1 million in the same quarter in 2015. Gross margin was 18.3%, compared with 14.0% in the second quarter of 2015. The increase in gross margin on a year-over-year basis was mainly due to the decline of raw material cost.

Selling and distribution expenses decreased by 17.1% to RMB51.6 million (US$7.8 million) from RMB62.3 million in the second quarter of 2015. The decrease in selling and distribution costs was primarily due to the lower transportation costs in China and fewer  units shipped to the international markets in the second quarter of 2016 compared with the same quarter last year. As a percentage of revenue, selling and distribution costs were 8.1% in the second quarter of 2016, compared to 9.5% in the same quarter a year ago.

Research and development ("R&D") expenses increased by 55.7% to RMB21.1 million (US$3.2 million), compared to RMB13.6 million in the second quarter of 2015. R&D as a percentage of revenue was 3.3% in the second quarter of 2016, compared to 2.1% in the same quarter a year ago.

Administrative expenses increased by 5.4% to RMB34.0 million (US$5.1 million) from RMB32.3 million in the second quarter of 2015. As a percentage of revenue, administrative expenses were 5.3%, compared to 4.9% of revenue in the second quarter of 2015.

Net profit and total comprehensive income for the second quarter of 2016 were RMB4.6 million (US$0.7 million), compared to net loss and total comprehensive loss of RMB14.1 million in the same quarter of 2015. 

Basic and diluted earnings per ADS in the second quarter of 2016 were RMB0.09 (US$0.01) compared to basic and diluted loss per ADS of RMB0.27 in the same quarter of 2015.

In the second quarter of 2016, the Company recorded cash flows from operating activities of RMB38.0 million (US$5.7 million). Capital expenditures for the purchase of property, plant and equipment in the second quarter were RMB 3.1 million (US$0.5 million). Deposits paid for acquisition of property, plant and equipment in the second quarter were RMB2.9 million (US$0.4 million).

During the second quarter of 2016 and 2015, the weighted average number of ordinary shares was 206.5 million and the weighted average number of ADSs was 51.6 million.

2016 First Six Months Results

Revenue for the first six months ended June 30, 2016 was RMB1,164.9 million (US$175.3 million) compared with RMB1,379.7 million in the first six months of 2015.

Aftermarket sales declined by 17.1% year-over-year to RMB545.0 million (US$82.0 million) in the first six months of 2016, and represented 46.8% of total six-month revenue. Sales to the Chinese OEM market decreased by 7.4% year-over-year to RMB419.4 million (US$63.1 million) and represented 36.0% of total revenue. International sales decreased by 25.5% year-over-year to RMB200.6 million (US$30.2 million) compared with the same period last year, and represented 17.2% of total revenue.

Tubed steel wheel sales for the first six months ended June 30, 2016, declined by 18.2% compared with the same period in 2015 and comprised 55.6% of revenue. Tubeless steel wheel sales decreased by 16.1% from the same period a year ago and comprised 37.2% of revenue.

Gross profit for the first six months ended June 30, 2016 was RMB217.6 million (US$32.7 million) compared with RMB191.3 million during the same period in 2015, up 13.7% year-over-year. Gross margin was 18.7% compared with 13.9% in the same period last year. Profit before taxation was RMB6.0 million (US$0.9 million), compared with loss before taxation of RMB15.9 million during the first six months of 2015.

Net profit and total comprehensive income for the first six months ended June 30, 2016, was RMB1.7 million (US$0.3 million) compared with loss and total comprehensive loss of RMB13.3 million during the same period in 2015. Basic and diluted loss per ordinary share and per ADS for the first six months ended June 30, 2016 were RMB0.01 (US$0.00) and RMB0.03 (US$0.01), respectively.

As of June 30, 2016, Zenix Auto had bank balances and cash of RMB905.2 million (US$136.2 million) and fixed bank deposits with a maturity period over three months of RMB260.0 million (US$39.1 million). Total bank borrowings were RMB558.0 million (US$84.0 million). Total equity attributable to owners of the Company was RMB2,565.2 million (US$386.0 million).

Conference Call Information

The Company will host a conference call, to be simultaneously webcast, on Thursday, August 18, 2016 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 18, 2016, at 11:59 p.m. ET. Interested parties may access the replay by dialing +1-877-660-6853 (U.S. Toll Free) or +1-201-612-7415 (International) and using Conference ID 13643141 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 RMB6.6459 to US$1.00, the effective noon buying rate as of June 30, 2016 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 715 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 June 30, 2016. 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

Investor Relations
Tel: +1-646-726-6511
Email:  zx@compassbell.com

- 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, 2016 and 2015

(RMB and US$ amounts expressed in thousands, except number of shares and ADSs and per share data)




2015 Q2

2016 Q2


2016 Q2


RMB' 000

RMB' 000


US$' 000







Revenue


657,385

639,546


96,232

Cost of sales


(565,265)

(522,519)


(78,623)

Gross profit


92,120

117,027


17,609

Other operating income


2,471

2,869


432

Net exchange gain


1,412

946


142

Selling and distribution costs


(62,284)

(51,630)


(7,769)

Research and development expenses


(13,567)

(21,120)


(3,178)

Administrative expenses


(32,251)

(34,003)


(5,116)

Finance costs


(3,423)

(5,313)


(799)

(Loss) profit  before taxation


(15,522)

8,776


1,321

Income tax credit (expense)


1,433

(4,131)


(622)







(Loss) profit and total comprehensive (loss) income for the period


(14,089)

4,645


 

699







(Loss) earnings per share






Basic


(0.07)

0.02


-

Diluted


(0.07)

0.02


-







(Loss) earnings per ADS






Basic


(0.27)

0.09


0.01

Diluted


(0.27)

0.09


0.01







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 first six months ended June 30, 2016 and 2015

(RMB and US$ amounts expressed in thousands, except number of shares and ADSs and per share data)





Six Months Ended June 30,




2015


2016


2016



RMB' 000


RMB' 000


US$' 000









Revenue



1,379,662


1,164,945


175,288

Cost of sales



(1,188,382)


(947,365)


(142,549)

Gross profit



191,280


217,580


32,739

Other operating income



6,992


3,356


505

Net exchange gain



3,462


802


121

Selling and distribution costs



(120,615)


(95,034)


(14,300)

Research and development expenses



(23,342)


(41,441)


(6,236)

Administrative expenses



(67,155)


(68,554)


(10,315)

Finance costs



(6,480)


(10,748)


(1,617)

(Loss) profit before taxation



(15,858)


5,961


897

Income tax credit (expense)



2,544


(4,226)


(636)









(Loss) profit  and total comprehensive (loss) income for the period



(13,314)


1,735


261









(Loss) earnings per share








Basic



(0.06)


0.01


-

Diluted



(0.06)


0.01


-









(Loss) earnings per ADS








Basic



(0.26)


0.03


0.01

Diluted



(0.26)


0.03


0.01









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,
 2015


June 30,
 2016


June 30,
 2016



RMB'000


RMB'000


US$' 000

ASSETS







Current Assets







   Inventories


181,905


160,384


24,133

   Trade and other receivables and prepayments


613,418


644,768


97,017

   Prepaid lease payments


9,425


9,425


1,418

   Pledged bank deposits


28,200


32,600


4,905

  Fixed bank deposits with maturity period over three months


260,000


260,000


39,122

   Bank balances and cash


817,247


905,219


136,208

Total current assets


1,910,195


2,012,396


302,803








Non-Current Assets







   Property, plant and equipment


1,506,318


1,441,117


216,843

   Prepaid lease payments


385,874


381,162


57,353

   Deferred tax assets


15,958


18,326


2,757

   Intangible assets


17,000


17,000


2,558

Total non-current assets


1,925,150


1,857,605


279,511

Total assets


3,835,345


3,870,001


582,314








EQUITY AND LIABILITIES







Current Liabilities







   Trade and other payables and accruals


606,922


636,921


95,836

   Amount due a shareholder


11,679


14,344


2,158

   Taxation payable


674


3,142


473

   Short-term borrowings


558,000


558,000


83,962

Total current liabilities


1,177,275


1,212,407


182,429

   Deferred income


9,292


8,894


1,338

   Deferred tax liabilities


85,284


83,471


12,560

Total non-current liabilities


94,576


92,365


13,898

Total liabilities


1,271,851


1,304,772


196,327








EQUITY







   Share capital


136


136


20

   Paid in capital


392,076


392,076


58,995

   Reserves


2,171,282


2,173,017


326,972

Total equity attributable to owners of the Company


2,563,494


2,565,229


385,987

Total equity and liabilities


3,835,345


3,870,001


582,314

 

 


China Zenix Auto International Limited

Unaudited Condensed Consolidated Statement of Cash Flows

For the three months ended June 30, 2016

(RMB and US$ amounts expressed in thousands)



 Three Months Ended


  June 30, 2016

OPERATING ACTIVITIES

 RMB' 000 


 US$' 000 

Profit before taxation

8,776


1,321

Adjustments for:




   Amortization of prepaid lease payments

2,356


355

   Depreciation of property plant and equipment

38,664


5,818

   Release of deferred income

(199)


(30)

   Finance costs

5,313


799

   Interest income

(2,638)


(397)

Operating cash flows before movements in working capital

52,272


7,866

   Decrease in inventories

19,083


2,871

   Increase in trade and other receivables and prepayments

(23,049)


(3,468)

   Decrease in trade and other payables and accruals

(8,400)


(1,264)

   Cash generated from operations

39,906


6,005

   Interest received

2,048


308

   PRC income tax refunded

510


77

   PRC income tax paid

(4,441)


(668)

NET CASH FROM OPERATING ACTIVITIES

38,023


5,722

INVESTING ACTIVITIES




   Purchase of property, plant and equipment

(3,104)


(467)

   Withdrawal of pledged bank deposits

6,500


978

   Placement of pledged bank deposits

(8,100)


(1,219)

   Deposits paid for acquisition of property, plant and equipment

(2,881)


(434)

   Placement of fixed bank deposits with maturity periods over three months

(50,000)


(7,523)

   Withdrawal of fixed bank deposits with maturity periods over three months

50,000


7,523

NET CASH USED IN INVESTING ACTIVITIES

(7,585)


(1,142)

FINANCING ACTIVITIES




   Interest paid

(6,376)


(959)

   Advance from a shareholder

949


143

NET CASH USED IN FINANCING ACTIVITIES

(5,427)


(816)

NET INCREASE IN CASH AND CASH EQUIVALENTS

25,011


3,764

Cash and cash equivalents at beginning of the period

880,495


132,487

Effect of foreign exchange rate changes

(287)


(43)

Cash and cash equivalents at end of the period

905,219


136,208

 

  

China Zenix Auto International Limited

Unaudited Condensed Consolidated Statement of Cash Flows

For the six months ended June 30, 2016

(RMB and US$ amounts expressed in thousands) 



Six Months Ended


 June 30, 2016

OPERATING ACTIVITIES

RMB' 000


US$' 000

Profit before taxation

5,961


897

Adjustments for:




   Amortization of prepaid lease payments

4,712


709

   Depreciation of property plant and equipment

77,670


11,687

   Release of deferred income

(398)


(60)

   Finance costs

10,748


1,617

   Interest income

(5,404)


(813)

Operating cash flows before movements in working capital

93,289


14,037

   Decrease in inventories

21,521


3,238

   Increase in trade and other receivables and prepayments

(32,627)


(4,909)

   Increase in trade and other payables and accruals

33,414


5,028

   Cash generated from operations

115,597


17,394

   Interest received

5,590


841

   PRC income tax refunded

510


77

   PRC income tax paid

(5,115)


(770)

NET CASH FROM OPERATING ACTIVITIES

116,582


17,542

INVESTING ACTIVITIES




   Purchase of property, plant and equipment

(8,338)


(1,255)

   Withdrawal of pledged bank deposits

6,500


978

   Placement of pledged bank deposits

(10,900)


(1,640)

   Proceeds on disposal of property, plant and equipment

-


-

   Deposits paid for acquisition of property, plant and equipment

(5,370)


(808)

   Placement of fixed bank deposits with maturity periods over three months

(370,000)


(55,673)

   Withdrawal of fixed bank deposits with maturity periods over three months

370,000


55,673

NET CASH USED IN INVESTING ACTIVITIES

(18,108)


(2,725)

FINANCING ACTIVITIES




   New bank borrowings raised

255,000


38,270

   Repayment of bank borrowings

(255,000)


(38,270)

   Interest paid

(12,924)


(1,944)

   Advance from a shareholder

2,665


401

NET CASH FROM FINANCING ACTIVITIES

(10,259)


(1,543)

NET INCREASE IN CASH AND CASH EQUIVALENTS

88,215


13,274

Cash and cash equivalents at beginning of the period

817,247


122,970

Effect of foreign exchange rate changes

(243)


(37)

Cash and cash equivalents at end of the period

905,219


136,207

SOURCE China Zenix Auto International Limited


Telephone: 4001161988   Address: No.1608, North Circle Road State Highway, Zhangzhou, Fujian Province, China
© Copyright 2008 China Zenix Auto International Limited. All rights reserved. 闽ICP备09025520号