China Automotive Systems, Inc. (CAAS) delivered solid second-quarter FY24 earnings, showcasing strong growth in both domestic and international markets. The company reported earnings per share (EPS) of $0.24, slightly lower than the $0.35 reported in the same period last year. However, net sales surged by 15.4% year-over-year (Y/Y) to $158.6 million, surpassing the consensus estimate of $137.41 million. This robust performance was fueled by a significant increase in demand for electric power steering (EPS) products.
CAAS’s traditional steering product sales rose by 7.5% Y/Y to $103.0 million, while EPS product sales soared by 33.7% to $55.6 million during the quarter. The company experienced strong growth in sales to its key customers, with sales to Henglong’s passenger vehicle steering customers increasing by 18.9% Y/Y and sales to Chery Auto rising by 28.8% Y/Y. However, export sales to North American customers dipped to $26.8 million from $28.9 million in the previous year due to reduced demand from one client. Meanwhile, sales in Brazil stood at $12.0 million, slightly lower than the $12.2 million reported in the same period last year.
The company’s profitability also saw significant improvement. Gross profit jumped by 29.0% Y/Y to $29.3 million, with the margin expanding to 18.5% from 16.5% a year ago. This improvement was attributed to a favorable product mix and effective cost management strategies. Income from operations also surged by 38.7% Y/Y to $10.8 million, primarily driven by higher sales and improved margins.
As of the end of June, CAAS held $148.4 million in cash and cash equivalents, along with pledged cash. The company remains optimistic about its future prospects, citing the positive trends in the Chinese automotive market. According to statistics from the China Association of Automobile Manufacturers, overall automobile sales in China increased by 6.1% Y/Y in the first six months of 2024, with passenger car sales up by 6.3% and commercial vehicle sales ahead by 4.9%. Sales of domestic cars rose by 1.4%, while Chinese vehicle exports surged by 30.5% during the same period.
CAAS has reiterated its revenue guidance for the full fiscal year 2024, forecasting $605.0 million. The company is confident about its ability to continue growing its business in both China and global markets, leveraging its diversified customer base and best-in-class product offerings. CEO Qizhou Wu highlighted the company’s transformation from a small domestic auto parts company to a large global tier-1 supplier with a presence in North America, South America, Europe, and Asia.
Following the strong earnings announcement, CAAS shares rose by 3.17% to $3.900 premarket on Tuesday.
