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November 10, 2016

China Automotive Systems sees growth despite lacklustre economy

Power steering maker China Automotive Systems said Q3 sales increased 4.2% to $94.6m, compared to $90.8m in the third quarter of 2015.

Power steering maker China Automotive Systems said Q3 sales increased 4.2% to $94.6m, compared to $90.8m in the third quarter of 2015.

Gross margin increased to 21.1% compared to 17.5% and net income was $5.7m, or earnings per share of $0.18, compared to $4.3m and $0.13, in the third quarter of 2015.

Nine-month sales were $312.5m ($323.5m), gross margin was 18.9% and earnings per share $0.52.

CEO Qizhou Wu said: "We are encouraged to see all of our subsidiaries' operations achieved growth in the third quarter of 2016 despite continuing lacklustre growth in the Chinese economy. We continued to grow our electric power steering business which grew by 26.1% and represented 27.0% of net sales compared with 22.4% in the same period last year. We remain optimistic about our EPS business and continue to expand our product portfolio and production capabilities. Even our traditional hydraulic steering products reversed its declining trend and registered an increase.

"Internationally, our Brazilian assembly plant has completed its trials and begun commercial production to serve our Tier-1 customer in Brazil and Chinese OEMs operating in the region. We anticipate that our North American operations will continue to expand in the years ahead."

The supplier said the significantly weakening Chinese currency against the US dollar negatively affected third quarter results by 6.4%, as it still generates a majority of its sales in mainland China while reporting in US dollars.

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Gross profit was $20.0m in the third quarter of 2016 compared to $15.9m in Q3 2015.

Nine-month gross profit was $59.1m, compared to $59.4m. Income from operations was $18.0m compared to $22.6m in the first nine months of 2015.

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