China Automotive Systems Says Loss Shrinks 92% as Sales Decline
China Automotive Systems Inc. (Nasdaq: CAAS), a leading power steering components and systems supplier in China, announced its net loss for the fourth quarter shrank to $3.2 million, or 10 cents per American depositary share, compared with $39 million, or $1.23 per ADS, the year before.
The narrower loss came primarily because of a one-time tax expense of $35.7 million in 2017 related to the U.S. tax reform, plus an additional tax of $4 million stemming from a planned dividend distribution from PRC subsidiaries to fulfill the payment of the one-time accrued tax.
The Hubei-based company said its net sales decreased to $124.3 million in the final three months of 2018 compared $143.7 million in the fourth quarter of 2017. The decrease resulted primarily from a weaker Chinese auto market year-over-year.
With the lower sales, China Automotive System said its selling expenses fell to $4.9 million in the fourth quarter of 2018 compared with $6.8 million in same period the year before. The decrease was primarily due to lower transportation expenses related to the lower volume.
"Our performance in 2018 reflected the slower growth of the automotive industry in China as the world's largest automotive market experienced lower overall sales for the first time in more than two decades," said Qizhou Wu, chief executive officer of CAAS.
Shares of China Automotive Systems fell to $3.17 in mid-day trading in New York today, down 13 cents per share.
For the full year 2019, China Automotive Systems provided revenue guidance of $510 million.
"We continue to focus on generating cash flow from operations to further build our financial strength," Jie Li, chief financial officer of CAAS, said. "Our joint ventures and product development contracts are solidifying relationships and enhancing our abilities to meet the current and future needs of our diverse customer base."
China Automotive Systems offers a range of steering system parts for passenger automobiles and commercial vehicles. It currently offers four separate series of power steering with an annual production capacity of more than 6 million sets of steering gears, columns and steering hoses.