Power steering components and systems supplier China Automotive Systems boosted net sales 28% to a record US$46.5m in Q2 2008, 28.1% year-over-year growth. Net income soared 93.2% to $4.7m.
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“We closed our slow season with a high note as we continue to outpace our market growth and win accounts from our competitors,” said CEO Qizhou Wu.
“While we continue to expand market share among Chinese domestic branded auto makers, we are also increasingly pursing businesses from European joint venture auto makers in China, We now have two major European auto powerhouses, Volkswagen and Peugeot, in our customer list for domestic China market. As we strive to increase the shipment to those OEMs, our next target is American auto makers,” he added.
Operating income Q2 2008 was down to $5.5m from $5.9m a year ago due to higher general and administrative expenses such as higher professional fees due to the issuance of $35m in convertible notes and the Henglong acquisition.
The supplier said its increased second quarter net income was largely due to the acquisition of Henglong minority interest and an income tax refund for domestic equipment purchased. The company also received a tax refund from the government in the same period of last year.
Chief Financial Officer Jie Li said: “While global and Chinese auto and auto parts markets are experiencing pressure from higher raw material prices and lower average selling prices, we have incorporated a series of efficiency measures to optimise our manufacturing facilities while providing growth.
“Also, since the first quarter, the unit cost of commercial vehicles steering gear increased, due to the sharp rise of the price of steel, its main raw material.
“We also successfully negotiated with our customers and raised the selling price of commercial vehicles steering gear. As a result, we maintained our gross margin over 30%.”
