China Automotive Systems Earnings: Profit and Revenue Drop

China Automotive Systems Inc. (NASDAQ:CAAS) reported its results for the first quarter. China Automotive Systems is a holding company that, through joint ventures in China and a wholly-owned subsidiary, manufactures power steering systems and other component parts for automobiles.

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China Automotive Systems Earnings Cheat Sheet for the First Quarter

Results: Reported a loss of $768,896 (3 cents per diluted share) in the quarter. China Automotive Systems Inc. had a net income of $19.6 million or 23 cents per share in the year-earlier quarter.

Revenue: Fell 7.2% to $84.5 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: China Automotive Systems Inc. reported adjusted net income of 12 cents per share. By that measure, the company fell short of mean estimate of 14 cents per share. It fell short of the average revenue estimate of $90.8 million.

Quoting Management: Mr. Qizhou Wu, chief executive officer of CAAS, commented: “During the first quarter, the PRC domestic passenger vehicle brands sold approximately 712,000 units, a year over year decline of 15%. On the commercial vehicle front, PRC truck sales continued to experience double-digit percentage declines due to fewer infrastructure projects and the slowed real estate market. As the largest supplier to many large domestic OEMs, we took hits from both sectors. While we are waiting for conditions to improve in the PRC, we are rapidly expanding our sales in North America and planning for expansions in emerging markets. Our shipments to North America, mainly to Chrysler, rose 86% from same period of 2011. We also recently announced our joint venture in Brazil, another large market currently dominated by European steering producers. Our financial standing remains solid, as we generated strong cash-flow in the first quarter.”

Key Stats:

The company has missed analyst estiamtes for four quarters in a row. It fell short by 2 cents in the fourth quarter of the last fiscal year, by 5 cents in the third quarter of the last fiscal year, and by 10 cents in the second quarter of the last fiscal year.

Revenue has fallen in the past four quarters. Revenue declined 0.7% to $100.9 million in the fourth quarter of the last fiscal year. The figure fell 1.4% in the third quarter of the last fiscal year from the year earlier and dropped 3% in the second quarter of the last fiscal year from the year-ago quarter.

After three consecutive quarters of profits, the company declared a loss in the latest quarter. The company reported a profit of $6.7 million in the fourth quarter of the last fiscal year, a profit of $10.1 million in the third quarter of the last fiscal year and $4.3 million in the second of the last fiscal year.

Margins contracted in the fourth quarter of the last fiscal year after expanding the quarter before. Gross margin dropped three percentage points from the year-earlier quarter to 19%. In the third quarter of the last fiscal year, the figure rose 0.2 percentage point from a year ago to 20.8%.

Looking Forward: For the next quarter, analysts are growing pessimistic about the company’s expected results. The average estimate for the second quarter is 14 cents per share, dropping from 17 cents a month ago. For the fiscal year, the average estimate has moved down from 69 cents a share to 58 cents over the last thirty days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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