China Zenix Auto International Limited Announces Unaudited Financial Results for the Third Quarter of 2015

- Cash flow from operations in first nine months reached RMB310.0 million (US$48.8 million) -

Dec 09, 2015, 04:30 ET from China Zenix Auto International Limited

ZHANGZHOU, China, Dec. 9, 2015 /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 third quarter and first nine months ended September 30, 2015.

Financial Highlights

Third Quarter 2015:

  • Revenue was RMB478.6 million (US$75.3 million) compared with RMB694.9 million in the 2014 third quarter;
  • Gross margin of 12.5%;
  • Net loss and total comprehensive loss for the period was RMB23.8 million (US$3.8 million) with loss per American Depositary Share ("ADS") of RMB0.46 (US$0.07);
  • Net cash flow from operating activities was RMB146.4 million (US$23.0 million).

First Nine Months of 2015:

  • Revenue was RMB1,858.3 million  (US$292.4 million);
  • Gross margin of 13.5%;
  • Net loss and total comprehensive loss for the period was RMB37.2 million (US$5.8 million) with loss per ADS of RMB0.72 (US$0.11);
  • Net cash flow from operations was RMB310.0 million (US$48.8 million).

Mr. Junqiu Gao, Deputy CEO and Chief Sales and Marketing Officer of Zenix Auto, commented, "The Chinese economy continued to experience headwinds during the third quarter. As a result, medium- and heavy-duty trucks unit sales declined 24% year-over-year with the heavy-duty sector suffering a 30% reduction, which negatively impacted our sales for the period. In this difficult environment, we are pleased to report that our aluminum wheels production facilities are running satisfactorily and our products are gaining more acceptance and recognition in the aftermarket and OEM market."

Mr. Martin Cheung, CFO of Zenix Auto, commented, "In the first nine months of 2015, we generated positive cash flow from operations of RMB310.0 million (US$48.8 million) and continued to improve our balance sheet in a very difficult market environment. Cash and bank balances have increased, inventories and trade payables have been reduced. We believe that our current stock price is deeply undervalued given our cash generating capability, our solid balance sheet and our leadership in China's commercial vehicle wheel market."

2015 Third Quarter Results

Revenue for the third quarter ended September 30, 2015 was RMB478.6 million (US$75.3 million) from RMB694.9 million for the third quarter of 2014. The decline in revenue on a year-over-year basis was mainly due to the significant decline in truck sales in China especially heavy duty trucks, coupled with the continued weaknesses in aftermarket and international markets.

Aftermarket sales in China decreased by 31.4% year-over-year to RMB249.5 million (US$39.3 million) in the third quarter of 2015 from RMB364.0 million in the third quarter of 2014. Unit selling price decreased year-over-year as a result of proactive price adjustments. Total unit sales in the aftermarket decreased by 16.1% year-over-year as a result of lower demand for aftermarket wheels. The weak OEM market also affected the aftermarket segment in China as competition intensified and pricing pressures increased.

Sales to the Chinese OEM market decreased by 34.2% year-over-year to RMB149.3 million (US$23.5 million) in the third quarter of 2015 compared to RMB226.8 million in the same quarter of 2014. Total unit sales in the OEM market decreased by 16.2% year-over-year as a result of weak truck sales, especially heavy-duty trucks, during the third quarter of 2015. Lower OEM sales revenue was also caused by decreases in pricing.

International sales decreased by 23.4% year-over-year to RMB79.8 million (US$12.5 million) in the third quarter of 2015 compared to sales of RMB104.1 million in the third quarter of 2014. The decline in export sales in the third quarter of 2015 was mainly due to significant competitive pricing and currency depreciation in Southeastern Asian countries including Thailand, Indonesian and Burma, which has weakened demand from these markets.

In the third quarter of 2015, domestic aftermarket sales, domestic OEM sales and international sales contributed 52.1%, 31.2% and 16.7% of revenue, respectively.

Sales of tubed steel wheels comprised 55.4% of 2015 third quarter revenue compared to 57.8% in the same quarter in 2014. Tubeless steel wheel sales represented 39.2% of third quarter revenue compared to 37.1% in the same quarter of 2014. Tubed and tubeless steel wheel sales remain the main sources of revenue for the Company.

Third quarter gross profit decreased by 41.4% to RMB59.6 million (US$9.4 million), compared to RMB101.7 million in the same quarter in 2014. Gross margin was 12.5%, compared with 14.6% in the third quarter of 2014. The decline in gross margin on a year-over-year basis was mainly due to the significant decline in revenue resulting from the rapid decrease in the overall end user market and that lower selling prices for wheels outpaced the decline in raw material costs.

Selling and distribution expenses decreased by 16.9% to RMB46.5 million (US$7.3 million) from RMB56.0 million in the third quarter of 2014. The decrease in selling and distribution costs was primarily due to the lower number of units shipped in the third quarter of 2015 compared with the same quarter last year. As a percentage of revenue, selling and distribution costs were 9.7% in the third quarter of 2015, compared to 8.1% in the same quarter a year ago. The higher selling and distribution costs as a percentage of revenue was mainly due to significantly weaker revenue in the third quarter of 2015.

Research and development ("R&D") expenses decreased by 50.9% to RMB13.7 million (US$2.1 million), compared to RMB27.8 million in the third quarter of 2014. R&D as a percentage of revenue was 2.9% in the third quarter of 2015, compared to 4.0% in last year's third quarter.

Administrative expenses decreased by 15.0% to RMB31.5 million (US$5.0 million) from RMB37.0 million in the third quarter of 2014, mainly due to a decline in personnel-related costs. As a percentage of revenue, administrative expenses were 6.6%, compared to 5.3% of revenue in the third quarter of 2014.

Net loss and total comprehensive loss for the third quarter of 2015 were RMB23.8 million (US$3.8 million), compared to net loss and total comprehensive loss of RMB12.3 million in the same quarter of 2014. 

Basic and diluted loss per ADS in the third quarter of 2015 were RMB0.46 (US$0.07) compared to basic and diluted loss per ADS of RMB0.24 in the same quarter of 2014. Basic and diluted loss per ordinary share in the third quarter of 2015 were RMB0.12 (US$0.02) compared to basic and diluted loss per ordinary share of RMB0.06 in the same quarter of 2014.

In the third quarter of 2015, the Company recorded cash inflows from operating activities of RMB146.4 million (US$ 23.0 million). Capital expenditures for the purchase of property, plant and equipment in the third quarter were RMB2.2 million (US$0.3 million). Deposits paid for acquisition of property, plant and equipment in the third quarter were RMB18.4 million (US$2.9 million).

During the third quarter of 2015 and 2014, the weighted average number of ordinary shares was 206.5 million and the weighted average number of ADSs was 51.6 million.

2015 First Nine-Month Results

Revenue for the first nine months ended September 30, 2015, was RMB1,858.3 million (US$292.4 million) compared with RMB2,550.7 million in the first nine months in 2014.

Aftermarket sales decreased by 29.4% to RMB907.0 million (US$142.7 million) in the first nine months of 2015, and represented 48.8% of total nine-month revenue. Sales to the Chinese OEM market decreased by 31.2% to RMB602.3 million (US$94.8 million) and represented 32.4% of revenue. International sales decreased by 10.4% to RMB349.0 million (US$54.9 million) compared to the same period last year, and represented 18.8% of revenue.

Tubed steel wheel sales for the first nine months ended September 30, 2015 accounted for 56.9% of revenue compared with 58.0% the same period in 2014. Tubeless steel wheel sales accounted for 37.9% of revenue compared with 37.5% the same period in 2014.

Gross profit for the first nine months ended September 30, 2015, was RMB250.9 million (US$39.5 million), compared with RMB476.8 million during the same period in 2014. Gross margin decreased to 13.5% compared from 18.7% in the same period last year.  Loss before taxation was RMB43.3 million (US$6.8 million), compared with profit before taxation of RMB112.9 million during the first nine months of 2014.

Net loss and total comprehensive loss for the first nine months ended September 30, 2015 was RMB37.2 million (US$5.8 million), compared with profit and total comprehensive income of RMB92.9 million during the same period in 2014. Basic and diluted loss per ordinary share and per ADS for the first nine months ended September 30, 2015 were RMB0.18 (US$0.03) and RMB0.72 (US$0.11), respectively.

As of September 30, 2015, Zenix Auto had bank balances and cash of RMB845.4 million (US$133.0 million) and fixed bank deposits with a maturity period over three months of RMB260.0 million (US$40.9 million). Total equity attributable to owners of the Company was RMB2,554.9 million (US$402.0 million).

For the first nine months ended September 30, 2015, the Company recorded cash inflows from operating activities of RMB310.0 million (US$48.8 million). Capital expenditures for the purchase of property, plant and equipment in the second quarter were RMB13.9 million (US$2.2 million). Deposits paid for acquisition of property, plant and equipment in the first nine months of 2015 were RMB53.8 million (US$8.5 million).

Conference Call Information

The Company will host a conference call on Wednesday, December 9, 2015 at 8:00 am EST/ 9:00 pm Beijing Time to discuss the financial results.

To participate, please call the following numbers 5 minutes before the call start time and ask to be connected to the "China Zenix Auto" conference call:

Phone Number:  +1-877-407-0782 (North America)
Phone Number:  +1-201-689-8567 (International)

In addition, the conference call will be broadcast live over the Internet at: http://www.investorcalendar.com/IC/CEPage.asp?ID=174550

Please go to the web site at least 15 minutes early to register, download and install any necessary software.

A telephone replay of the call will be available after the conclusion of the conference call through 11:59 pm EST on January 9, 2016. The dial-in details for the replay are: U.S. Toll Free Number +1-877-660-6853, International dial-in number +1-201-612-7415 using Conference ID "13625575" 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 RMB6.3556 to US$1.00, the effective noon buying rate as of September 30, 2015 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. With a large intellectual property portfolio, the Company offers more than 510 series of 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 30 countries worldwide. With five large, strategically located manufacturing facilities in multiple regions across China, the Company has total annual production capacity of approximately 15.0 million units of steel wheels as of September 30, 2015. 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 Contact:
Kevin Theiss
Grayling
Tel: +1-646-284-9409
Email:  zx@grayling.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 September 30, 2015 and 2014

(RMB and US$ amounts expressed in thousands, except per share data)




Three Months Ended September 30,



2014


2015


2015



RMB' 000


RMB' 000


 US$' 000








Revenue


694,937


478,592


75,302

Cost of sales


(593,240)


(418,974)


(65,922)

Gross profit


101,697


59,618


9,380

Other operating income 


10,183


6,332


996

Net exchange (loss) gain


(177)


1,630


256

Selling and distribution costs


(56,019)


(46,549)


(7,324)

Research and development expenses


(27,817)


(13,659)


(2,149)

Administrative expenses


(37,001)


(31,468)


(4,951)

Finance costs


(4,833)


(3,333)


(524)

Loss before taxation 


(13,967)


(27,429)


(4,316)

Income tax credit


1,683


3,593


565

Loss and total comprehensive
loss for the period


(12,284)


(23,836)


(3,751)

Loss per share







Basic


(0.06)


(0.12)


(0.02)

Diluted


(0.06)


(0.12)


(0.02)

Loss per ADS







Basic


(0.24)


(0.46)


(0.07)

Diluted


(0.24)


(0.46)


(0.07)

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 nine months ended September 30, 2015 and 2014

(RMB and US$ amounts expressed in thousands, except per share data)




Nine Months Ended September 30,



2014


2015


2015



RMB' 000


RMB' 000


US$' 000

Revenue


2,550,727


1,858,254


292,381

Cost of sales


(2,073,911)


(1,607,356)


(252,904)

Gross profit


476,816


250,898


39,477

Other operating income 


21,627


13,324


2,096

Net exchange gain


1,775


5,092


801

Selling and distribution costs


(191,833)


(167,164)


(26,302)

Research and development


(71,876)


(37,001)


(5,822)

expenses







Administrative expenses


(110,095)


(98,623)


(15,517)

Finance costs


(13,475)


(9,813)


(1,544)

Profit (loss) before taxation 


112,939


(43,287)


(6,811)

Income tax (expense) credit


(19,990)


6,137


966

Profit (loss) and total
comprehensive income
(loss) for the period


92,949


(37,150)


(5,845)

Earnings (loss) per share







Basic


0.45


(0.18)


(0.03)

Diluted


0.45


(0.18)


(0.03)

Earnings (loss) per ADS







Basic


1.80


(0.72)


(0.11)

Diluted


1.80


(0.72)


(0.11)

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 are expressed in thousands)




December 31,
 2014


September 30,
 2015


September 30,
 2015



RMB'000


RMB'000


US$' 000

ASSETS







Current Assets







Inventories


382,067


347,580


54,689

Trade and other
receivables and
prepayments


921,653


488,539


76,867

Prepaid lease payments


9,425


9,425


1,483

Pledged bank deposits


59,100


43,000


6,766

Fixed bank deposits
with maturity period over
three months


260,000


260,000


40,909

Bank balances and
cash


556,990


845,376


133,013

Total current assets


2,189,235


1,993,920


313,727








Non-Current Assets







Property, plant and
equipment


1,525,567


1,521,995


239,473

Prepaid lease payments


395,299


388,230


61,085

Deposits paid for
acquisition of property,
plant and equipment


1,590


-


-

Deferred tax assets


4,356


16,169


2,544

Intangible assets


17,000


17,000


2,675

Total non-current
assets


1,943,812


1,943,394


305,777

Total assets


4,133,047


3,937,314


619,504








EQUITY AND
LIABILITIES







Current Liabilities







Trade and other
payables and accruals


938,251


723,044


113,765

Taxation payable


1,063


424


67

Amount due to a
shareholder


5,507


9,841


1,548

Bank borrowings


508,000


558,000


87,797

Total current liabilities


1,452,821


1,291,309


203,177

Non-current Liabilities







Deferred income


10,088


9,491


1,493

Deferred tax liabilities


78,077


81,603


12,840

Total non-current
liabilities


88,165


91,094


14,333

Total liabilities


1,540,986


1,382,403


217,510

EQUITY







Share capital


136


136


21

Additional paid in capital


392,076


392,076


61,690

Reserves


2,199,849


2,162,699


340,283

Total equity attributable
to owners of the
Company


2,592,061


2,554,911


401,994

Total equity and
liabilities


4,133,047


3,937,314


619,504

 

 

China Zenix Auto International Limited

Unaudited Condensed Consolidated Statements of Cash Flows

For the three months ended September 30, 2015

(RMB and US$ amounts are expressed in thousands)





Three Months Ended
September 30, 2015




RMB' 000


US$' 000

OPERATING ACTIVITIES





Loss before taxation


(27,429)


(4,316)

Adjustments for:






Amortization of prepaid lease payments


2,357


371


Depreciation of property plant and equipment


31,721


4,991


Release of deferred income


(199)


(31)


Finance costs


3,333


524


Interest income


(3,597)


(566)

Operating cash flows before movements in working capital


6,186


973






Decrease in inventories


81,901


12,886

Decrease in trade and other receivables and prepayments


210,536


33,127

Decrease in trade and other payables and accruals


(156,415)


(24,611)

Cash generated from operations


142,208


22,375

Interest received


4,775


751

PRC income tax paid


(567)


(89)

NET CASH FROM OPERATING ACTIVITIES


146,416


23,037

INVESTING ACTIVITIES





Purchase of property, plant and equipment


(2,163)


(340)

Withdrawal of pledged bank deposits


13,600


2,140

Deposits paid for acquisition of property, plant and
equipment


(18,377)


(2,891)

Placement of fixed bank deposits with maturity periods
over three months


(210,000)


(33,042)

Withdrawal of fixed bank deposits with maturity
periods over three months


210,000


33,042

NET CASH USED IN INVESTING ACTIVITIES


(6,940)


(1,091)

FINANCING ACTIVITIES





New bank borrowings raised


80,000


12,587

Repayment of bank borrowings


(80,000)


(12,587)

Interest paid


(7,998)


(1,258)

Advance from a shareholder  


365


57

NET CASH USED IN FINANCING ACTIVITIES


(7,633)


(1,201)

NET INCREASE IN CASH AND CASH
EQUIVALENTS


131,843


20,745

Cash and cash equivalents at beginning of the
period


714,154


112,366

Effect of foreign exchange rate changes


(621)


(98)

Cash and cash equivalents at end of the period


845,376


133,013

 

 

China Zenix Auto International Limited

Unaudited Condensed Consolidated Statements of Cash Flows

For the nine months ended September 30, 2015

(RMB and US$ amounts are expressed in thousands)




Nine Months Ended
September 30, 2015



RMB' 000


US$' 000

OPERATING ACTIVITIES





Loss before taxation


(43,287)


(6,811)

Adjustments for:






Amortization of prepaid lease payments


7,069


1,112


Depreciation of property plant and equipment


94,779


14,913


Release of deferred income


(597)


(94)


Finance costs


9,813


1,544


Interest income


(11,348)


(1,786)

Operating cash flows before movements in working capital


56,429


8,878







Decrease in inventories


34,487


5,426

Decrease in trade and other receivables and prepayments


431,987


67,970

Decrease in trade and other payables and accruals


(222,993)


(35,086)

Cash generated from operations


299,910


47,188

Interest received


12,847


2,021

PRC income tax paid


(2,789)


(438)

NET CASH FROM OPERATING ACTIVITIES


309,968


48,771

INVESTING ACTIVITIES





Purchase of property, plant and equipment


(13,914)


(2,189)

Withdrawal of pledged bank deposits


16,100


2,533

Proceeds on disposal of property, plant and equipment


50


8

Deposits paid for acquisition of property, plant and equipment


(53,807)


(8,466)

Placement of fixed bank deposits with maturity periods over three months


(470,000)


(73,951)

Withdrawal of fixed bank deposits with maturity periods over three months


470,000


73,951

NET CASH USED IN INVESTING ACTIVITIES


(51,571)


(8,114)

FINANCING ACTIVITIES





New bank borrowings raised


335,000


52,709

Repayment of bank borrowings


(285,000)


(44,842)

Interest paid


(23,973)


(3,772)

Advance from a shareholder


4,334


682

NET CASH FROM FINANCING ACTIVITIES


30,361


4,777

NET INCREASE IN CASH AND CASH EQUIVALENTS


288,758


45,434

Cash and cash equivalents at beginning of the period


556,990


87,638

Effect of foreign exchange rate changes


(372)


(59)

Cash and cash equivalents at end of the period


845,376


133,013

 

 

SOURCE China Zenix Auto International Limited



RELATED LINKS

http://www.zenixauto.com/en