China Zenix Auto International Limited Reports 2019 First Quarter Results

ZHANGZHOU, China, May 16, 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 first quarter ended March 31, 2019.

Financial Highlights

First Quarter 2019:

    --  Revenue was RMB669.4 million (US$99.7 million), down 18.0%
        year-over-year
    --  Sales to the Chinese OEM market decreased by 24.7% year-over-year
    --  Sales of aluminum wheels accounted for 9.0% of total sales
    --  Gross margin was 12.1%
    --  Net loss and total comprehensive loss was RMB4.5 million (US$0.7
        million) with basic and diluted loss per American Depositary Share
        ("ADS") of RMB0.09 (US$0.01) compared with net income and total
        comprehensive income of RMB26.1 million for the first quarter of 2018
        with basic and diluted income per ADS of RMB0.51 in the first quarter of
        2018.

Mr. Junqiu Gao, Deputy CEO and Chief Sales and Marketing Officer of Zenix Auto, commented, "Our lower sales reflect a challenging environment with slower economic growth. We have proactively adjusted our pricing policies to address market demand and our cost structure."

Mr. Martin Cheung, CFO of Zenix Auto, commented, "We maintained our strong liquid assets base of a mix of bank balances and fixed bank deposits of approximately US$189 million. As our production capacity is sufficient for the current market opportunities, we didn't need to deploy capital for additional capital equipment in the first quarter of 2019."

2019 First Quarter Results

Revenue for the first quarter of 2019 was RMB669.4 million (US$99.7 million) compared to RMB816.2 million in the first quarter of 2018. The decrease in revenue on a year-over-year basis was mainly due to a weaker domestic truck OEM market in a sluggish economic environment, and lower demand following the Company's selling price increases in the domestic aftermarket and international markets.

Sales to the Chinese OEM market were RMB350.4 million (US$52.2 million) compared to RMB465.1 million in the same quarter of 2018. Total unit sales in the OEM market decreased by 20.4% year-over-year during the first quarter of 2019.

Aftermarket sales in China were RMB240.5 million (US$35.8 million) from RMB253.9 million in the first quarter of 2018. Total unit sales in the aftermarket decreased by 6.9% year-over-year as the demand was slightly affected in the aftermarket wheel segment after the Company increased selling prices to address the high raw material costs.

International sales were RMB78.5 million (US$11.7 million) compared to sales of RMB97.2 million in the first quarter of 2018. Total unit sales in the international sales decreased by 26.6% year-over-year in the first quarter of 2019 mainly due to the Company's price increase policy associated with high raw material costs, which led to weaker demand in Southeastern Asian countries.

In the first quarter of 2019, domestic OEM sales, domestic aftermarket sales and international sales contributed 52.4%, 35.9% and 11.7% of revenue, respectively.

Sales of tubed steel wheels comprised 42.7% of 2019 first quarter revenue compared to 45.7% in the same quarter in 2018. Tubeless steel wheel sales represented 43.6% of 2019 first quarter revenue compared to 41.3% in the same quarter of 2018. Sales of aluminum wheels accounted for 9.0% of first quarter revenue as compared to 9.5% in the same quarter a year ago.

First quarter gross profit was RMB81.2 million (US$12.1 million) compared to RMB125.9 million in the same quarter in 2018. Gross margin was 12.1%, compared with 15.4% in the first quarter of 2018. The decrease in gross margin on a year-over-year basis was mainly due to the weaker total sales volume and lower selling price in the OEM market. The Company raised selling prices in the domestic aftermarket and international market during the first quarter, but they were not high enough to offset the negative impact of the total volume decline and the weaker OEM demand.

Selling and distribution expenses decreased by 12.3% to RMB39.5 million (US$5.9 million) from RMB45.0 million in the first quarter of 2018. The decrease in selling and distribution costs was primarily due to lower sales in the first quarter of 2019 compared with the same quarter last year. As a percentage of revenue, selling and distribution costs were 5.9% in the first quarter of 2019, compared to 5.5% in the same quarter a year ago.

Research and development ("R&D") expenses increased by 3.7% to RMB13.3 million (US$2.0 million), compared to RMB12.9 million in the first quarter of 2018. R&D as a percentage of revenue was 2.0% in the first quarter of 2019 compared to 1.6% in the same quarter a year ago. The higher R&D expenses are mainly due to increased product development programs associated with new material development, new product design, and new production equipment development.

Administrative expenses decreased by 6.8% to RMB28.6 million (US$4.3 million) from RMB30.7 million in the first quarter of 2018. As a percentage of revenue, administrative expenses were 4.3%, compared to 3.8% of revenue in the first quarter of 2018.

Net loss and total comprehensive loss was RMB4.5 million (US$0.7 million) in the first quarter of 2019 compared to net income and total comprehensive income of RMB26.1 million for the first quarter of 2018.

Basic and diluted loss per ADS were RMB0.09 (US$0.01) compared to basic and diluted income per ADS of RMB0.51 in the first quarter of 2018.

In the first quarter of 2019, the Company recorded net cash outflow from operating activities of RMB37.6 million (US$5.6 million). Days Sales Outstanding (DSO) remained at 61 days in the first quarter of 2019, slightly increased from 54 days during the full year of 2018. Capital expenditures for the purchase of property, plant and equipment in the first quarter were nil.

During the first quarter of 2019 and 2018, 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, 2019, Zenix Auto had bank balances and cash of RMB977.2 million (US$145.6 million) and fixed bank deposits with a maturity period over three months of RMB290.0 million (US$43.2 million). Account receivables were RMB523.6 million (US$78.0) compared to RMB527.0 million at the end of 2018. Total bank borrowings were RMB558.0 million (US$83.1 million). Total equity attributable to owners of the Company was RMB2,534.1 million (US$377.6 million).

Conference Call Information

The Company will host a conference call, to be simultaneously webcast, on Thursday, May 16, 2019 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), or Mainland China toll free +86-400-120-2840. 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 June 16, 2019, at 11:59 p.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 48119 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 RMB6.7112 to US$1.00, the effective noon buying rate as of March 31, 2019 in The City of New York, and 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 78 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 March 31, 2019. 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

- 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, 2019 and 2018


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






                                                                                                
            
              Three Months Ended March 31,


                                                                                                         2018                                        2019            2019



                                                                                 
            
              RMB' 000               
            
              RMB' 000  
     
      US$' 000




            Revenue                                                                                  816,207                                     669,350          99,736



            Cost of sales                                                                          (690,294)                                  (588,197)       (87,644)




            Gross profit                                                                             125,913                                      81,153          12,092



            Other operating income                                                                     4,174                                       2,906             433



            Net exchange gain(loss)                                                                  (2,457)                                    (1,260)          (188)



            Selling and distribution costs                                                          (45,015)                                   (39,469)        (5,881)



            Research and development expenses                                                       (12,855)                                   (13,335)        (1,987)



            Administrative expenses                                                                 (30,707)                                   (28,624)        (4,265)



            Finance costs                                                                            (5,670)                                    (5,892)          (878)




            Profit before taxation                                                                    33,383                                     (4,521)          (674)



            Income tax expense                                                                       (7,235)                                         22               4






            Profit and total comprehensive                                                            26,148                                     (4,499)          (670)
    income for the period






            Earnings per share



            Basic                                                                                       0.13                                      (0.02)         (0.00)



            Diluted                                                                                     0.13                                      (0.02)         (0.00)






            Earnings per ADS



            Basic                                                                                       0.51                                      (0.09)         (0.01)



            Diluted                                                                                     0.51                                      (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 Financial Position


                                                        
         
               (RMB and US$ amounts expressed in thousands)






                                                             
             
                December 31, 2018                
              
       March 31, 2019   
       
       March 31, 2019


                                                                 
              
                RMB'000                         
            
         RMB'000        
       
         US$' 000




              ASSETS



              Current Assets



              Inventories                                                                       172,111                                     228,396                    34,032



              Trade and other receivables and                                                   776,473                                     771,315                   114,930
    prepayments



              Prepaid lease payments                                                              9,425                                       9,425                     1,404



              Pledged bank deposits                                                              33,500                                      31,900                     4,753



              Fixed bank deposits with maturity                                                 290,000                                     290,000                    43,211
    period over three months



              Bank balances and cash                                                            933,250                                     977,239                   145,613



              Total current assets                                                            2,214,759                                   2,308,275                   343,943




              Non-Current Assets



              Property, plant and equipment                                                   1,099,003                                   1,064,722                   158,649



              Prepaid lease payments                                                            357,599                                     355,243                    52,933



              Deferred tax assets                                                                40,272                                      42,422                     6,321



              Intangible assets                                                                  17,000                                      17,000                     2,533




              Total non-current assets                                                        1,513,874                                   1,479,387                   220,436




              Total assets                                                                    3,728,633                                   3,787,662                   564,379






              EQUITY AND LIABILITIES



              Current Liabilities



              Trade and other payables and                                                      611,463                                     590,526                    87,991
           accruals



              Amount due to a shareholder                                                         9,911                                       9,924                     1,479



              Taxation payable                                                                    2,477                                       2,400                       358



              Short-term bank borrowings                                                        473,000                                     558,000                    83,145




              Total current liabilities                                                       1,096,851                                   1,160,850                   172,973






              Deferred tax liabilities                                                           86,239                                      85,967                    12,809



              Deferred income                                                                     6,903                                       6,704                       999




              Total non-current liabilities                                                      93,142                                      92,671                    13,808




              Total liabilities                                                               1,189,993                                   1,253,521                   186,781






              EQUITY



              Share capital                                                                         136                                         136                        20



              Paid in capital                                                                   392,076                                     392,076                    58,421



              Reserves                                                                        2,146,428                                   2,141,929                   319,157




              Total equity attributable to owners of                                          2,538,640                                   2,534,141                   377,598
            the company




              Total equity and liabilities                                                    3,728,633                                   3,787,662                   564,379


                                                                                 
              
               China Zenix Auto International Limited


                                                                        
              
               Unaudited Condensed Consolidated Statements of Cash Flows


                                                                                
              
               For the three months ended March 31, 2019


                                                                              
              
               (RMB and US$ amounts expressed in thousands)






                                                                                                                                                                                        Three Months Ended
                                                                                                                                                                               March 31, 2019



                                                                                                                                                         RMB' 000                                      US$' 000



         OPERATING ACTIVITIES



         Loss before taxation                                                                                                                                      (4,521)                                         (674)



         Adjustments for:


                                  
              Amortization of prepaid lease payments                                                                                      2,356                                            351


                                             Depreciation of property plant and equipment                                                                  34,232                                          5,101


                                  
              Release of deferred income                                                                                                  (199)                                          (30)


                                  
              Finance costs                                                                                                               5,892                                            878


                                             Loss on disposal of property, plant and equipment                                                                  1                                              -


                                  
              Interest income                                                                                                           (2,345)                                         (349)




         Operating cash flows before movements in working capital                                                                                                   35,416                                          5,277



         Increase in inventories                                                                                                                                  (56,285)                                       (8,387)



         Increase in trade and other receivables and prepayments                                                                                                     3,709                                            553



         Decrease in trade and other payables and accruals                                                                                                        (21,050)                                       (3,137)

                                                                                                                                                                                                                      ---


         Cash used in operations                                                                                                                                  (38,210)                                       (5,694)



         Interest received                                                                                                                                           3,109                                            463



         PRC income tax paid                                                                                                                                       (2,477)                                         (369)




         NET CASH USED IN OPERATING ACTIVITIES                                                                                                                    (37,578)                                       (5,600)

                                                                                                                                                                                                                      ---




         INVESTING ACTIVITIES



         Withdrawal of pledged bank deposits                                                                                                                         1,600                                            238



         Proceeds on disposal of property, plant and equipment                                                                                                          48                                              7



         Placement of fixed bank deposits with maturity periods over                                                                                             (240,000)                                      (35,761)
      three months



         Withdrawal of fixed bank deposits with maturity periods over                                                                                              240,000                                         35,761
      three months

                                                                                                                                                                                                               ---


         NET CASH FROM INVESTING ACTIVITIES                                                                                                                          1,648                                            245

                                                                                                                                                                                                                      ---




         FINANCING ACTIVITIES



         New bank borrowings raised                                                                                                                                340,000                                         50,662



         Repayment of bank borrowings                                                                                                                            (255,000)                                      (37,996)



         Interest paid                                                                                                                                             (5,779)                                         (861)



         Repayment to a shareholder                                                                                                                                     13                                              2




         NET CASH FROM FINANCING ACTIVITIES                                                                                                                         79,234                                         11,807

                                                                                                                                                                                                                      ---




         NET INCREASE IN CASH AND CASH EQUIVALENTS                                                                                                                  43,304                                          6,452



         Cash and cash equivalents at beginning of the period                                                                                                      933,250                                        139,059



         Effect of foreign exchange rate changes                                                                                                                       685                                            102



         Cash and cash equivalents at end of the period                                                                                                            977,239                                        145,613

                                                                                                                                                                                                                      ===

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SOURCE China Zenix Auto International Limited