ZHANGZHOU, China, March 26, 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 fourth quarter and full year ended December 31, 2018.

Financial Highlights

Fourth Quarter 2018:

• Revenue was RMB695.4 million (US$101.1 million), down 5.6% year-over-year from RMB736.3 million in the fourth quarter of 2017;
• Sales to the Chinese aftermarket sector increased by 11.3% year-over-year to RMB262.0 million (US$38.1 million) from RMB235.4 million in the fourth quarter of 2017;
• Sales to international markets increased by 6.5% to RMB109.6 million (US$15.9 million) from RMB102.9 million in the fourth quarter of 2017;
• Tubed steel wheel sales represented 46.3% of fourth quarter revenue compared to 44.3% in the fourth quarter of 2017;
• Aluminum wheel sales accounted for 10.3% of total revenue in the fourth quarter of 2018;
• On December 31, 2018, total cash and cash equivalents and fixed bank deposits with maturity period over three months were RMB 1,223.3 million (US$ 177.9 million);
• Short-term bank borrowings were reduced to RMB473 million (US$68.8 million) from RMB558 million at the end of 2017.

Full Year 2018:

• Revenue was RMB3,149.6 million (US$458.1 million), up 11.3% year-over-year from RMB2,831.0 million in 2017;
• Sales to the Chinese OEM market increased by 14.7% to RMB1,758.1 million (US$255.7 million);
• Sales to the Chinese aftermarket sector increased by 10.2% to RMB1,002.5 million (US$145.8 million);
• Net loss was RMB8.0 million (US$1.2 million) with loss per share of RMB0.04 (US$0.01) compared with net profit and total comprehensive income of RMB9.1 million with earnings per share of RMB0.04 in 2017.

Mr. Junqiu Gao, Deputy CEO and Chief Sales and Marketing Officer of Zenix Auto, commented, "We closed out the year on a high note as our sales to domestic OEMs, domestic aftermarket, and international markets all recorded growths in 2018. The weaker sales of trucks in the fourth quarter of 2018 validated the need of our diversified model of addressing changes in different market segments. While lower sales of new trucks and buses reduced our OEM sales in the fourth quarter, we are pleased to report the regained sales growth of our aftermarket products that upkeep older vehicles and offer superior cost benefit to vehicle owners.  We remain the largest supplier of wheels to the commercial vehicle market in China. Our large portfolio of products and well-established production capacity will further enable us to maintain our market leadership in the future."  

Mr. Martin Cheung, CFO of Zenix Auto, commented, "We remain financially disciplined as we have controlled our operating expenses with lower SG&A and R&D expenses in the fourth quarter of 2018.  With minimal needs for new capital projects, our free cash flow achieved a record high level in 2018 and bolstered our financial standing. We plan to raise prices to reflect the higher material costs and improve the margin in coming quarters."     

2018 Fourth Quarter Results

Revenue for the fourth quarter ended December 31, 2018 was RMB695.4 million (US$101.1 million) from RMB 736.3 million for the fourth quarter of 2017. The decrease in revenue on a year-over-year basis was mainly due to weaker sales in domestic commercial vehicle OEM market.

Aftermarket sales in China increased by 11.3% year-over-year to RMB262.0 million (US$38.1 million) in the fourth quarter of 2018 from RMB235.4 million in the fourth quarter of 2017. Total unit sales in the aftermarket increased by 12.0% year-over-year while pricing slightly decreased. The aftermarket wheel segment regained growth as new truck sales started to tape off.

Sales to the Chinese OEM market decreased by 18.6% year-over-year to RMB323.8 million (US$47.1 million) in the fourth quarter of 2018 compared to RMB397.9 million in the same quarter of 2017. Total unit sales in the OEM market decreased by 19.2% year-over-year as a result of slower new truck sales growth, especially heavy- and medium-duty trucks, during the fourth quarter of 2018.

International sales increased by 6.5% year-over-year to RMB109.6 million (US$15.9 million) in the fourth quarter of 2018 compared to sales of RMB 102.9 million in the fourth quarter of 2017. During the quarter, the Company increased selling price to reflect the higher material cost. Total unit sales in the international sales decreased by 6.1% year-over-year in the fourth quarter of 2018 as the weaker demand in the price sensitive regions such as Southeast Asia, negatively affected overall sales.

In the fourth quarter of 2018, domestic aftermarket sales, domestic OEM sales and international sales contributed 37.7%, 46.5% and 15.8% of revenue, respectively.

Sales of tubed steel wheels comprised 46.3% of 2018 fourth quarter revenue compared to 44.3% in the same quarter in 2017. Tubeless steel wheel sales represented 37.7% of fourth quarter revenue compared to 43.2% in the same quarter of 2017. 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 10.3% of fourth quarter revenue as compared to 8.1% in the same quarter a year ago.

Fourth quarter gross profit decreased by 34.6% to RMB71.0 million (US$10.3 million), compared to RMB 108.5 million in the same quarter in 2017. Gross margin was 10.2%, compared with 14.7% in the fourth quarter of 2017. 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's wheel price increase. Due to the government-sponsored campaign to curb overcapacity in the steel sector, steel prices reached the highest levels since 2010.

Selling and distribution expenses decreased by 5.4% to RMB38.9 million (US$5.7 million) from RMB41.1 million in the fourth quarter of 2017. As a percentage of revenue, selling and distribution costs were 5.6% in the fourth quarter of 2018, same as that of the fourth quarter a year ago.

Research and development ("R&D") expenses decreased by 19.1% to RMB12.5 million (US$1.8 million), compared to RMB15.5 million in the fourth quarter of 2017. R&D as a percentage of revenue was reduced to 1.8% in the fourth quarter of 2018, compared to 2.1% in same quarter of 2017.

Administrative expenses decreased by 8.6% to RMB 31.5 million (US$4.6 million) from RMB34.4 million in the fourth quarter of 2017. As a percentage of revenue, administrative expenses were 4.5% in the fourth quarter of 2018, compared to 4.7% of revenue in the fourth quarter of 2017.

Net loss and total comprehensive loss for the fourth quarter of 2018 was RMB13.2 million (US$1.9 million), compared to net profit and total comprehensive income of RMB9.5 million in the same quarter of 2017. 

Basic and diluted loss per share in the fourth quarter of 2018 was RMB 0.06 (US$0.01) compared to basic and diluted earnings per share of RMB0.05 in the same quarter of 2017.

In the fourth quarter of 2018, the Company recorded net cash inflows from operating activities of RMB55.1 million (US$8.0 million). The capital expenditures for the purchase of property, plant and equipment was RMB0.5 million (US$0.1 million) in the fourth quarter of 2018.

During the fourth quarter of 2018 and 2017, the weighted average number of ordinary shares was 206.5 million.

2018 Full Year Results

Revenue for the year ended December 31, 2018 grew 11.3% to RMB3,149.6 million (US$458.1 million) compared with RMB2,831.0 million in 2017.

Aftermarket sales increased by 10.2% to RMB1,002.5 million (US$145.8 million) in 2018 and represented 31.8% of total revenue. Sales to the Chinese OEM market

increased by 14.7% to RMB1,758.1 million (US$255.7 million) and represented 55.8% of total revenue. International sales increased by 0.3% to RMB389.0 million (US$ 56.6 million) compared to last year and represented 12.4% of total revenue.

Tubed steel wheel sales in 2018 accounted for 46.1% of revenue compared with 45.4% in 2017. Tubeless steel wheel sales accounted for 41.1% of revenue compared with 43.9% in 2017. With the increase in market acceptance, aluminum wheel sales accounted for 8.9% of revenue of 2018 compared with 6.8% in 2017.

Gross profit for fiscal year 2018 was RMB369.8 million (US$53.8 million), compared with RMB381.6 million in 2017. Gross margin was 11.7% in 2018 as compared to 13.5% in 2017.

Net loss and total comprehensive loss for full year 2018 was RMB8.0 million (US$1.2 million), compared with net profit and total comprehensive income of RMB9.1 million in 2017. Basic and diluted loss per share for the full year ended December 31, 2018 were RMB0.04 (US$0.01) as compared to basic and diluted earnings per share RMB0.04 in 2017.

As of December 31, 2018, Zenix Auto had bank balances and cash of RMB933.3 million (US$135.7 million) and fixed bank deposits with a maturity period over three months of RMB290.0 million (US$42.2 million). Short-term bank borrowings were reduced to RMB473 million (US$68.8 million) from RMB558 million at the end of 2017. Total equity attributable to owners of the Company was RMB2,538.6 million (US$369.2 million).

For the year ended December 31, 2018, the Company recorded cash inflows from operating activities of RMB290.3 million (US$42.2 million). Capital expenditures for the purchase of property, plant and equipment were RMB11.2 million (US$1.6 million).

Conference Call Information

The Company will host a conference call on Tuesday, March 26, 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 April 26, 2019, at 8:00 a.m. EDT. 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 45492 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 RMB6.8755 to US$1.00, the effective noon buying rate as of December 31, 2018 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 87 distributors in more than 31 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, 2018. 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: Kevin.Theiss@awakenlab.com

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SOURCE China Zenix Auto International Limited