China Zenix Auto International Announces Financial Results for the First Quarter of 2013

ZHANGZHOU, China, May 24, 2013 /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 first quarter ended March 31, 2013.

Financial Highlights

First Quarter 2013:

• Revenue of RMB830.2 million (US$133.7 million);
• Gross margin of 20.6%;
• Profit and total comprehensive income for the period was RMB42.6 million (US$6.9 million) with earnings per American Depositary Share ("ADS") of RMB0.83 (US$0.13);
• Bank balances and cash were RMB673.9 million ($108.5 million), as of March 31, 2013.

Mr. Jianhui Lai, Chairman and Chief Executive Officer of Zenix Auto, commented, "Chinese economy is currently going through a challenging transition and demand for commercial vehicle has experienced major headwinds. As commercial vehicle sales in China suffered three consecutive years of decline, demand for wheels from both OEM sector and aftermarket also significantly weakened. In such a challenging environment, as the leader in the Chinese commercial vehicle wheel market, we focus on maintaining our market share, strengthening new product development, and improving product quality and internal management. We believe these efforts are paving the way for our future resurgence of growth when market condition improves. As we enter the second quarter, we are starting to see early signs of stabilization in China's commercial vehicle markets. While maintaining market share with our existing customers, we are proactively developing new relationships with potential customers. We remain optimistic on the near-term recovery trend and long-term growth outlook of Chinese commercial vehicle market, as China is on track to continue its urbanization."

Mr. Yifan Li, Chief Financial Officer of Zenix Auto, commented, "In such a difficult market condition, we continued to deliver solid profits, and strengthen our financial standing. While our current ratio remains stable, we managed to reduce our bank borrowings and improve our balance sheet. All these lay a strong foundation for us to continue with our long-term growth strategy and new project development."

2013 First Quarter Results

Revenue for the first quarter ended March 31, 2013 was RMB830.2 million (US$ 133.7 million) compared to RMB1,044.2 million for the first quarter of 2012, but was higher than the RMB800.1 million in the fourth quarter of 2012.

Aftermarket sales in China declined by 13.9% year-over-year to RMB430.4 million (US$69.3 million) in the first quarter of 2013, but were higher than the RMB411.1 million in the fourth quarter of 2012. There was a modest increase in aftermarket unit sales for tubed and tubeless wheels combined. Aftermarket wheel sales declined due to price adjustments resulting from fewer construction and transportation projects underway in the first quarter of 2013 compared with the same quarter in 2012.

Sales to the Chinese OEM market decreased by 29.1% year-over-year to RMB269.4 million (US$43.4 million) in the first quarter of 2013, but were higher than the RMB263.7 million in the fourth quarter of 2012.

International sales decreased by 20.5% year-over-year to RMB130.5 million (US$21.0 million) in the first quarter of 2013, but were higher than the RMB125.3 million in the fourth quarter of 2012. The decrease in export sales in the first quarter was mainly due to a weaker commercial vehicle market in India. However, the sales to other Asian countries experienced an increase and continued to account for a growing proportion of international sales, as the Company encouragingly added a number of newer customers in these markets. In addition, our tubeless products, due to their functionality and quality, have received more orders from our international customers.

In the first quarter of 2013, domestic aftermarket sales, domestic OEM sales and international sales contributed 51.8%, 32.4% and 15.7% of revenue, respectively.

Tubed steel wheel sales comprised 58.9% of 2013 first quarter revenue compared to 55.3% in the same quarter in 2012. Tubeless steel wheel sales represented 36.9% of first quarter revenue compared to 40.9% in the same quarter in 2012.

First quarter gross profit was RMB171.4 million (US$27.6 million), compared to RMB286.1 million in the same quarter in 2012. Gross margin declined to 20.6% from 27.4% in the first quarter of 2012. The decline in gross margin reflected lower sales volume, and a product mix change as sales of lower-margin tubed wheels increased as a percentage of total sales.

Selling and distribution costs decreased by 7.4% to RMB61.7 million (US$9.9 million) compared to RMB66.7 million in the first quarter of 2012. Lower selling and distribution costs resulted primarily from reduced advertising and business promotions, and lower sales commission. As a percentage of revenue, selling and distribution costs was 7.4% due to lower revenue in the first quarter of 2013 compared to 6.4% in the same quarter a year ago.

Research and development (R&D) expenses were RMB20.2 million (US$3.3 million) compared to RMB21.7 million in the first quarter of 2012. R&D as a percentage of revenue was 2.4% in the first quarter of 2013 compared to 2.1% in last year's first quarter. The Company remains committed to developing new products and innovative solutions to address customer needs and to raise the barriers to enter the markets.

Administrative expenses increased by 7.5% to RMB34.0 million (US$5.5 million) from RMB31.7 million in the first quarter of 2012 due to higher personnel costs. As a percentage of revenue, administrative expenses were 4.1% compared to 3.0% of revenue in the first quarter of 2012.

Profit and total comprehensive income for the first quarter of 2013 were RMB42.6 million (US$6.9 million) compared to RMB135.3 million in the same quarter of 2012. 

Earnings per ordinary share and earnings per ADS in the first quarter of 2013 were RMB0.21 (US$0.03) and RMB0.83 (US$0.13), respectively.

During the first quarter of 2013 and 2012, the weighted average number of ordinary shares was 206.5 million and the weighted average number of ADSs was 51.6 million, respectively.

As of March 31, 2013, Zenix Auto had bank balances and cash of RMB673.9 million (US$108.5 million) and fixed bank deposits with a maturity period over three months of RMB200.0 million (US$32.2 million). Total equity attributable to owners of the Company was RMB2,322.4 million (US$373.9 million).

During the first quarter, the Company posted cash outflows from operating activities of RMB26.5 million (US$4.3 million). Capital expenditures for the purchase of property, plant and equipment in the first quarter was RMB51.2 million (US$8.3 million).

Business Outlook

Management reiterates the revenue guidance for the year ending December 31, 2013 to be approximately RMB3.8 billion with profit and total comprehensive income of approximately RMB290 million. This target is based on the Company's current views on operating and market conditions, which are subject to change.

Conference Call Information

The Company will host a conference call, to be simultaneously webcast, on Friday, May 24, 2013 at 8:00 a.m. EDT/ 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.

In addition, the conference call will be broadcast live over the Internet at: http://www.investorcalendar.com/IC/CEPage.asp?ID=171052. Please go to the web site at least 15 minutes early to register, download and install any necessary software.

A replay will be available shortly after the conclusion of the conference call through June 24, 2013 at 11:59 p.m. EDT. 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 "415406" 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 RMB6.2108 to US$1.00, the effective noon buying rate as of March 29, 2013 in The City of New York for cable transfers of RMB as set forth in 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 430 series of tubed steel wheels, tubeless steel wheels, and off-road steel wheels in both the aftermarket and OEM market in China and internationally. Zenix Auto's customers include group members of a number of 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 an aggregate annual production capacity of approximately 15.0 million units of steel wheels as of March 31,2013. For more information, please visit: http://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. Among other things, the revenue guidance and quotations from management in this announcement, as well as Zenix Auto's strategic and operational plans, contain forward-looking statements. Zenix Auto may also 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 Zenix Auto'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, including but not limited to the following: our growth strategies; our future business development, including our ability to successfully develop new tubeless steel wheel products and the planned introduction of aluminum wheels; our ability to expand our distribution network; overall growth in the aftermarket and OEM market in China and elsewhere, which depends on a number of factors beyond our control including economic growth rates and vehicle sales; and changes in our revenues and certain cost or expense items as a percentage of our revenues. Further information regarding these and other risks is included in our filings with the SEC. Zenix Auto 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 Zenix Auto undertakes no duty to update such information, except as required under applicable law.  

For more information, please contact

Investor Contact:
Kevin Theiss / Shiwei Yin
Grayling
Tel: +1-646-284-9409
Email: [email protected] 
[email protected]

Media Contact:
Ivette Almeida
Grayling
Tel: +1 917-302-9946
Email: [email protected]

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SOURCE China Zenix Auto International Limited