SORL reports annual revenues exceeding $100 million

Jan. 1, 2020
SORL Auto Parts has reported a 36 percent revenue and 40 percent net income growth for 2007, with annual revenues exceeding $100 million for the first time. In addition, company executives report that SORL's 2007 OEM sales have increased by 52 percen

SORL Auto Parts has reported a 36 percent revenue and 40 percent net income growth for 2007, with annual revenues exceeding $100 million for the first time. In addition, company executives report that SORL's 2007 OEM sales have increased by 52 percent, outpacing the company's competitors.

"We are very excited to close a strong 2007 as we demonstrated a robust 36.4 percent growth in revenue and a faster 40 percent growth in net income," says Xiaoping Zhang, the company's chairman and CEO. "With the continuous infrastructure build-out in China and higher exports to emerging markets, the Chinese heavy truck sector posted a record-breaking year in growth."

Zhang adds that as the usage of heavy trucks and special trucks reached a new high, SORL's aftermarket replacement department experienced corresponding solid growth. On the export side, the company has expanded market coverage from 72 countries and regions in 2006 to 81 in 2007. Zhang also credits the increased attention and recognition from other international OEMS to the company's sale of its products to a major truck manufacturer in India.

Fourth quarter highlights for SORL include revenue that eclipsed $32.5 million, a 34.8 percent increase as compared to $24.1 million for the same period in 2006. Revenues from China's domestic OEM market, China's domestic aftermarket and international markets for the fourth quarter of 2007 were $11.1million, $10.1 million and $11.3 million, respectively.

The company's gross profit for the fourth quarter of 2007 was $8.3 million, a 52.4 percent increase as compared to $5.5 million for the same period in 2006. The gross profit margin reached 25.6 percent compared with 22.8 percent in the same quarter last year.

Net income for the fourth quarter of 2007 was $2.4 million, or $0.13 earnings per diluted share, as compared to net income of $1.9 million, or $0.13 earnings per diluted share in the same quarter last year. The difference between the increase in net income and EPS was due to the issuance of 4.9 million new common shares during a secondary public offering completed in December 2006, which weighted the average diluted shares more heavily in the fourth quarter of 2007.

In 2007, SORL's export revenue was $43.4 million, an increase of 28.1 percent as compared to $33.9 million in 2006. The Chinese OEM market, the Chinese aftermarket and international customers accounted for approximately 35.6 percent, 26.9 percent and 37.5 percent, respectively, of annual sales for 2007.

According to China Association of Automobile Manufacturers, the unit production of the Chinese heavy duty vehicle and medium vehicle sectors including trucks, chassis and semi-trailers, grew over 43.3 percent in 2007 as compared to 2006. Company sales in the OEM market increased by $14.1 million or 52.0 percent for the fiscal year ended Dec. 31, 2007.

The company's gross profit for the 2007 year was $27.0 million, an increase of 40.1 percent as compared to $19.3 million for the 2006 year. Gross margin increased to 23.3 percent as compared to 22.7 percent in 2006. The company is employing a systematic lean manufacturing system with cost control measures to continuously improve manufacturing cycle times, reduce production waste and lower unit costs. These actions were successful as the gross profit margin was higher during the year.

"As we increased our capital expenditures and our fixed assets, our non-cash depreciation and amortization also increased accordingly," says Zongyun Zhou, the company's chief financial officer. "On the R&D side, we invested $860,000 in new models and designs to bring higher margin products to the marketplace. We also added 15 new sales and marketing personnel during 2007 to enhance our market penetration in China and abroad. The last quarter is typically a strong sales season, but we also experienced highertransportation costs and packaging costs. This year's higher fuel prices increased our transportation costs."

According to the company, SORL is poised for a strong export performance in 2008, similar to its 2007 performance.

"After a strong export performance in 2007, the growth momentum is likely to continue for Chinese commercial vehicle producers in 2008," Zhang adds. "Many emerging markets favor the competitive pricing, quality and durability of Chinese trucks and buses. As we are already a key supplier to Chinese truck and bus OEMs, we are strategically aligning our aftermarket distribution channels in these export markets to take advantage of the growing number of Chinese vehicles being sold there."

For more information about SORL, visit the company's Web site.