China Zenix Auto International Limited Reports First Quarter 2021 Financial Results
May 26, 2021
ZHANGZHOU, China, May 26, 2021 /PRNewswire/ -- China Zenix Auto International Limited (OTC: ZXAIY) ("Zenix Auto" or the "Company"), one of the largest commercial vehicle wheel manufacturers in China in both the aftermarket and OEM market by sales volume, announced today its unaudited financial results for the first quarter ended March 31, 2021.
Financial Highlights
First Quarter 2021:
- Revenue grew 23.8% year-over-year to RMB397.3 million (US$60.6 million);
- Total unit sales in the OEM market increased by 79.1% year-over-year as a result of a significant increase in the Company's wheel sales during the first quarter of 2021, especially in the heavy- and medium-duty categories;
- Net loss and total comprehensive loss for the first quarter of 2021 was RMB128.4 million (US$19.6 million);
- As of March 31, 2021, Zenix Auto had bank balances and cash of RMB528.2 million (US$80.6 million) and fixed bank deposits with a maturity period over three months of RMB210.0 million (US$32.1 million), which were equivalent to RMB14.3 (US$2.18) in cash and fixed bank deposits per American Depositary Share ("ADS");
- Total equity attributable to owners of the Company was RMB1,906.3 million (US$291.0 million) as of March 31, 2021.
Mr. Junqiu Gao, Deputy CEO and Chief Sales and Marketing Officer of Zenix Auto, commented, "In the first quarter of 2021, our results reflect key drivers of the automotive industry in China and the lingering effects of COVID-19 in international markets."
"According to the China Association of Automobile Manufacturers, commercial vehicle sales in China rose by 77.3% year-over-year in the first quarter of 2021. Our unit sales increase of 79.1% in the OEM segment surpassed the industry growth as we improved our market leadership in this key segment. The forthcoming national implementation of the National VI emission standards in 2021, stricter enforcement of anti-overloading regulations, and introduction of new infrastructure projects, all generated higher demand for new commercial vehicles, especially trucks."
"Our strong OEM sales in the first quarter of 2021 partially mitigated the continuing weakness in international markets and the Chinese aftermarket segment. There was lower international demand reflecting the impact of COVID-19. Many economies are still struggling and there is a preference for lower-priced wheels in price sensitive markets. Chinese aftermarket sales declined due to ongoing anti-overloading campaign creating demand for new vehicles as well as the mandate for newer and more environmental-friendly vehicles."
"We are well positioned in each of our markets and supply our industry-leading portfolio of advanced wheels to a large number of domestic OEMs. We have increased our research and development investment to further develop wheel materials and designs to improve performance and quality while taking steps to reduce unit costs concurrently."
Mr. Martin Cheung, CFO of Zenix Auto, commented, "We had bank balances of RMB528.2 million (US$80.6 million) and fixed bank deposits of RMB210.0 million (US$32.1 million) at the end of the first quarter of 2021. These amounts were equivalent to RMB14.3 (US$2.18) in cash and fixed bank deposits per ADS on March 31, 2021. We will use these financial resources to improve our operations to increase sales and returns for long-term profitability."
2021 First Quarter Results
Revenue for the first quarter ended March 31, 2021 increased by 23.8% to RMB397.3 million (US$60.6 million) from RMB 320.8 million for the first quarter of 2020. The increase in revenue on a year-over-year basis was mainly due to a stronger OEM market.
Aftermarket sales in China were RMB92.5 million (US$14.1 million) in the first quarter of 2021, decreased from RMB104.8 million in the first quarter of 2020. Total unit sales in the aftermarket decreased by 5.5% year-over-year while average pricing decreased by mid-single digit year-over-year. The aftermarket wheel segment was negatively affected by an increase in the number of new vehicles on the road, a demand shift to lower-priced products and the Chinese government's heightened anti-overloading enforcement.
Sales to the Chinese OEM market were RMB279.9 million (US$42.7 million) in the first quarter of 2021, compared to RMB168.4 million in the same quarter of 2020. Total unit sales in the OEM market increased by 79.1% year-over-year as a result of a significant increase in the Company's wheel sales during the first quarter of 2021, especially in the heavy- and medium-duty categories.
International sales were RMB24.9 million (US$3.8 million) in the first quarter of 2021, compared to sales of RMB 47.6 million in the first quarter of 2020. Total unit sales in the international markets decreased by 40.9% year-over-year in the first quarter of 2021 as weaker demand in price sensitive regions such as Southeast Asia, negatively affected overall sales.
In the first quarter of 2021, domestic aftermarket sales, domestic OEM sales and international sales contributed 23.3%, 70.4% and 6.3% of revenue, respectively.
Sales of tubed steel wheels accounted for 38.4% of revenue in the first quarter of 2021 compared to 38.8% of revenue in the same quarter in 2020. Tubeless steel wheel sales accounted for 41.8% of revenue in the first quarter of 2021 compared to 46.0% of revenue in the same quarter of 2020. Tubed and tubeless steel wheel sales remained the main sources of revenue for the Company. Sales of aluminum wheels accounted for 14.9% of revenue in the first quarter of 2021 compared to 10.1% of revenue in the same quarter a year ago.
Gross loss was RMB61.8 million (US$9.4 million) in the first quarter of 2021, compared to a gross loss of RMB 2.1 million in the same quarter of 2020. The negative gross margin in the first quarter of 2021 was mainly due to pricing pressure across all segments, weaker demand in the aftermarket and international markets, and rising raw material costs.
Selling and distribution expenses were RMB34.6 million (US$5.3 million) in the first quarter of 2021, compared to RMB25.6 million in the first quarter of 2020. As a percentage of revenue, selling and distribution costs were 8.7% in the first quarter of 2021, compared to 8.0% in the first quarter a year ago.
Research and development ("R&D") expenses were RMB18.4 million (US$2.8 million) in the first quarter of 2021, compared to RMB11.9 million in the first quarter of 2020. As a percentage of revenue, R&D expenses increased to 4.6% in the first quarter of 2021, compared to 3.7% in same quarter of 2020.
Administrative expenses were RMB37.7 million (US$5.7 million) in the first quarter of 2021, compared to RMB31.2 million in the first quarter of 2020. As a percentage of revenue, administrative expenses were 9.5% in the first quarter of 2021, compared to 9.7% of revenue in the first quarter of 2020.
Net loss and total comprehensive loss for the first quarter of 2021 was RMB128.4 million (US$19.6 million), compared to net loss and total comprehensive loss of RMB60.6 million in the same quarter of 2020.
Basic and diluted loss per ADS in the first quarter of 2021 was RMB2.49 (US$0.38) compared to basic and diluted loss per ADS of RMB1.17 in the same quarter of 2020.
During the first quarters of 2021 and 2020, the weighted average number of ordinary shares was 206.5 million and the weighted average number of ADSs was 51.6 million.
As of March 31, 2021, Zenix Auto had bank balances and cash of RMB528.2 million (US$80.6 million) and fixed bank deposits with a maturity period over three months of RMB210.0 million (US$32.1 million). Short-term bank borrowings were RMB558.0 million (US$85.2 million). Total equity attributable to owners of the Company was RMB1,906.3 million (US$291.0 million).
For the first quarter ended March 31, 2021, the Company recorded cash outflows from operating activities of RMB158.7 million (US$24.2 million). Capital expenditures for the purchase of property, plant and equipment were RMB0.8 million (US$0.1 million).
Conference Call Information
The Company will host a conference call, to be simultaneously webcast, on Wednesday, May 26, 2021 at 8:00 a.m. ET/ 8:00 p.m. Beijing Time. Interested parties may participate in the conference call by dialing +1-877-407-0782 (U.S. Toll Free) or +1-201-689-8567 (International). Please dial in five minutes before the call starting time and ask to be connected to the "China Zenix Auto" conference call.
A replay will be available shortly after the conclusion of the conference call through June 26, 2021, at 8:00 a.m. ET. Interested parties may access the replay by dialing +1-877-481-4010 (U.S. Toll Free) or +1-919-882-2331 (International) and using Conference ID 41345 to access the replay.
Exchange Rate Information
The United States dollar (US$) 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 RMB6.5518 to US$1.00, the effective noon buying rate as of March 31, 2021 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 one of the largest commercial vehicle wheel manufacturers in China in both the aftermarket and OEM market by sales volume. The Company offers more than 883 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 products are primarily sold to large PRC commercial vehicle manufacturers and exported to over 54 distributors in more than 24 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 March 31, 2021. 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 consequences of the coronavirus outbreak to economic conditions and the automobile industry in general, and the financial position and operating results of the Company in particular, have been material in 2020, are changing rapidly, and cannot be predicted. 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@awakenlab.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 March 31, 2021 and 2020 (RMB and US$ amounts expressed in thousands, except number of shares and per share data)
| |||||||
Three Months Ended March 31, | |||||||
2020 | 2021 | 2021 | |||||
RMB' 000 | RMB' 000 | US$' 000 | |||||
Revenue | 320,783 | 397,280 | 60,637 | ||||
Cost of sales | (322,874) | (459,097) | (70,072) | ||||
Gross loss | (2,091) | (61,817) | (9,435) | ||||
Other operating income | 3,059 | 3,212 | 490 | ||||
Net exchange gain (loss) | 72 | (15) | (2) | ||||
Selling and distribution costs | (25,565) | (34,633) | (5,286) | ||||
Research and development expenses | (11,855) | (18,402) | (2,809) | ||||
Administrative expenses | (31,217) | (37,659) | (5,748) | ||||
Finance costs | (5,985) | (5,707) | (871) | ||||
Loss before taxation | (73,582) | (155,021) | (23,661) | ||||
Income tax credit | 13,018 | 26,575 | 4,056 | ||||
Loss and total comprehensive loss for the period |
(60,564) |
(128,446) | (19,605) | ||||
Loss per share | |||||||
Basic | (0.29) | (0.62) | (0.09) | ||||
Diluted | (0.29) | (0.62) | (0.09) | ||||
Loss per ADS | |||||||
Basic | (1.17) | (2.49) | (0.38) | ||||
Diluted | (1.17) | (2.49) | (0.38) | ||||
Shares | 206,500,000 | 206,500,000 | 206,500,000 | ||||
ADSs | 51,625,000 | 51,625,000 | 51,625,000 | ||||
China Zenix Auto International Limited Unaudited Condensed Consolidated Statements of Financial Position (RMB and US$ amounts expressed in thousands)
| ||||||
December 31, | March 31, | March 31, | ||||
RMB'000 | RMB'000 | US$' 000 | ||||
ASSETS | ||||||
Current Assets | ||||||
Inventories | 90,351 | 170,735 | 26,059 | |||
Trade and other receivables and prepayments | 617,328 | 581,500 | 88,754 | |||
Pledged bank deposits | 26,000 | 25,000 | 3,816 | |||
Fixed bank deposits with maturity period over three months | 290,000 | 210,000 | 32,052 | |||
Bank balances and cash | 616,290 | 528,203 | 80,620 | |||
Total current assets | 1,639,969 | 1,515,438 | 231,301 | |||
Non-Current Assets | ||||||
Property, plant and equipment | 960,453 | 993,874 | 151,695 | |||
Right-of-use assets | 348,174 | 345,818 | 52,782 | |||
Deposit paid for acquisition of property, plant and equipment | 62,083 | 3,720 | 568 | |||
Deferred tax assets | 117,846 | 144,540 | 22,061 | |||
Intangible assets | 17,000 | 17,000 | 2,594 | |||
Long term prepayments | 12,000 | 11,000 | 1,679 | |||
Total non-current assets | 1,517,556 | 1,515,952 | 231,379 | |||
Total assets | 3,157,525 | 3,031,390 | 462,680 | |||
EQUITY AND LIABILITIES | ||||||
Current Liabilities | ||||||
Trade and other payables and accruals | 489,380 | 491,771 | 75,059 | |||
Bank borrowings | 558,000 | 558,000 | 85,167 | |||
Total current liabilities | 1,047,380 | 1,049,771 | 160,226 | |||
Deferred tax liabilities | 70,111 | 70,230 | 10,719 | |||
Deferred income | 5,310 | 5,111 | 780 | |||
Total non-current liabilities | 75,421 | 75,341 | 11,499 | |||
Total liabilities | 1,122,801 | 1,125,112 | 171,725 | |||
EQUITY | ||||||
Share capital | 136 | 136 | 21 | |||
Paid in capital | 392,076 | 392,076 | 59,842 | |||
Reserves | 1,642,512 | 1,514,066 | 231,092 | |||
Total equity attributable to owners of the company | 2,034,724 | 1,906,278 | 290,955 | |||
Total equity and liabilities | 3,157,525 | 3,031,390 | 462,680 | |||
China Zenix Auto International Limited Unaudited Condensed Consolidated Statements of Cash Flows For the three months and year ended March 31, 2021 (RMB and US$ amounts expressed in thousands)
| ||||||
Three Months Ended | ||||||
OPERATING ACTIVITIES | March 31, 2021 | |||||
RMB' 000 | US$' 000 | |||||
Loss before taxation | (155,021) | (23,661) | ||||
Adjustments for: | ||||||
Depreciation of right-of-use assets | 2,356 | 360 | ||||
Depreciation of property, plant and equipment | 29,526 | 4,507 | ||||
Release of deferred income | (199) | (30) | ||||
Finance costs | 5,707 | 871 | ||||
Loss on disposal of property, plant and equipment | 17 | 3 | ||||
Interest income | (2,379) | (363) | ||||
Operating cash flows before movements in working capital | (119,993) | (18,313) | ||||
Increase in inventories | (80,384) | (12,269) | ||||
Decrease in trade and other receivables and prepayments | 36,763 | 5,611 | ||||
Increase in trade and other payables and accruals | 2,344 | 358 | ||||
Cash used in operations | (161,270) | (24,613) | ||||
Interest received | 2,532 | 386 | ||||
NET CASH USED IN OPERATING ACTIVITIES | (158,738) | (24,227) | ||||
INVESTING ACTIVITIES | ||||||
Purchase of property, plant and equipment | (829) | (127) | ||||
Withdrawal of pledged bank deposits | 150,000 | 22,894 | ||||
Placement of pledged bank deposits | (149,000) | (22,742) | ||||
Proceeds on disposal of property, plant and equipment | 26 | 4 | ||||
Deposits paid for acquisition of property, plant and equipment | (3,720) | (568) | ||||
Placement of fixed bank deposits with maturity periods over three months | (80,000) | (12,210) | ||||
Withdrawal of fixed bank deposits with maturity periods over three months | 160,000 | 24,421 | ||||
NET CASH FROM INVESTING ACTIVITIES | 76,477 | 11,672 | ||||
FINANCING ACTIVITIES | ||||||
New bank borrowings raised | 340,000 | 51,894 | ||||
Repayment of bank borrowings | (340,000) | (51,894) | ||||
Interest paid | (5,738) | (876) | ||||
NET CASH USED IN FINANCING ACTIVITIES | (5,738) | (876) | ||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (87,999) | (13,431) | ||||
Cash and cash equivalents at beginning of the year | 616,290 | 94,064 | ||||
Effect of foreign exchange rate changes | (88) | (13) | ||||
Cash and cash equivalents at end of the year | 528,203 | 80,620 | ||||
SOURCE China Zenix Auto International Limited
