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May 23, 2022

China Automotive Systems books Q1 operating and net losses

Lower gross profits and higher operating expenses.

By Graeme Roberts

Power steering specialist China Automotive Systems said first quarter 2022 sales increased 4.7% year on year to US$136.4 million.

Gross profit was $14.7 million with a margin of 10.8%, compared with $19.7 million and 15.1% in Q1 2021.

Operating loss was $1.5 million compared to year ago profit of $4.2 million. The loss was primarily due to lower gross profits and higher operating expenses in 2022, CAS said.

Net loss was $0.06 million compared to a net profit of $3.2 million the previous year.

CEO Qizhou Wu said: “We continued to achieve sales growth in a difficult market as our products target diversified markets in China and abroad. In the first quarter of 2022, Chinese passenger vehicle sales increased by 9%, but commercial vehicle sales declined 31.7%, according to the China Association of Automobile Manufacturers.”

“Our sales to Chery Automobile increased by 127.2% as they purchased more steering units. Sales of our electric power steering (EPS) products rose by 66% while our Henglong KYB subsidiary’s EPS sales increased by 63.7%. EPS sales has now increased to 30.1% of our total sales, up from 19.0% in the same quarter last year. While sales to North American customers declined by 7.1%, our South American sales continued to grow in the first quarter of 2022.

“The temporary COVID-19 lockdowns in China have created a challenging environment in the near term,” Wu added.

Loss from operations was $1.5 million in the first quarter of 2022, compared to income from operations of $4.2 million in the first quarter of 2021.

Outlook

CAS reduced revenue guidance for the full year 2022 to $490 million from $510 million “due to the economic impact of COVID-19 and foreign exchange volatility”.

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