Lentuo International Announces Second Quarter 2012 Financial Results

BEIJING, Sept. 25, 2012 /PRNewswire/ -- Lentuo International Inc. (NYSE: LAS) ("Lentuo" or the "Company"), a leading non-state-owned automobile retailer headquartered in Beijing, today reported its financial results for the second quarter ended June 30, 2012.

Second Quarter 2012 Financial Highlights

  • Revenues increased 21.2% to RMB792.5 million ($124.7 million) in the second quarter 2012 from RMB653.8 million in the second quarter 2011.
  • Vehicles sold increased 54.5% to 4,301 vehicles in the second quarter 2012 from 2,784 vehicles in the second quarter 2011.
  • Vehicles serviced increased 31.7% to 45,843 vehicles in the second quarter 2012 from 34,818 vehicles in the second quarter 2011.
  • Net income decreased 28.4% to RMB8.4 million ($1.3 million) in the second quarter 2012 from RMB11.8 million in the second quarter 2011.

"The successful implementation of our expansion and diversification strategy continued with strong sequential and year-over-year revenue growth during the second quarter of 2012," said Mr. Hetong Guo, Founder and Chairman of Lentuo. "The new green field Audi dealership and the FAW-Volkswagen flagship store in Beijing following the five new dealerships added in the second half of 2011 will be significant steps in our expansion strategy and will provide increased momentum.  Our recent partnerships with First Automobile Finance and its two subsidiaries represent a strong vote of confidence that validates and further supports our growth strategy.  Among other benefits, it will help us finance dealership expansions, improve our competitive position, provide insurance services and strengthen our brand recognition in the luxury car market. We are very proud to be the first automobile retailer in China to sign such an agreement with FAW Auto Finance.

"Leveraging the strong relationships we have built with industry players in an increasingly competitive environment, we remain confident that these initiatives will lead to sustained sales growth and improved shareholder value."   

Second Quarter 2012 Financial Performance

Revenues for the three months ended June 30, 2012 increased 21.2% to RMB792.5 million ($124.7 million) from RMB653.8 million in the second quarter of 2011.

Revenues from automobile sales increased 24.3% to RMB709.9 million ($111.7 million) compared to RMB571.1 million during the same period in 2011. The increase was primarily due to higher vehicle sales resulting from the addition of five new dealerships in the second half of 2011. The five new dealerships contributed RMB231.5 million in revenues.

During the second quarter of 2012, the Company sold 4,301 vehicles, representing a 54.5% increase from 2,784 vehicles in the second quarter of 2011. The Company's five new dealerships added a combined 1,808 vehicles during the second quarter of 2012.

The average new vehicle unit price for the second quarter of 2012 was RMB167,730 ($26,402), a 18.2% decrease from RMB205,152 for the same period in 2011. Typically, vehicles sold by the dealerships outside Beijing sell for lower prices than vehicles sold by the original Lentuo dealerships in Beijing. However, during the second quarter of 2012, average new vehicle unit price for the original Lentuo dealerships decreased as well. This was mainly due to inventory buildup as a result of excess production by vehicle manufacturers which directly affected new vehicle selling price.

Revenues from repair and maintenance services in the second quarter of 2012 decreased 18.4% to RMB64.6 million ($10.2 million) compared to RMB79.2 million during the same period in 2011. Revenues at the five new dealerships acquired in the second half of 2011 increased as a result of promotional activities aimed at expanding business and customer loyalty. However, this was not sufficient to offset the decrease in revenues at the older dealerships caused by intensified market competition, Promotions included a customer loyalty program where free repairs are offered to customers who have continuously serviced their vehicles with Lentuo and complementary accessories following the purchase of a vehicle at a Lentuo dealership.

Primarily as a result of the foregoing, the Company serviced 45,843 vehicles during the three months ended June 30, 2012, which represents a 31.7% increase over the 34,818 vehicles serviced in the second quarter of 2011. The increase was primarily due from the addition of five new dealerships in the second half of 2011.



Revenues
(in thousands of Renminbi)



2Q 12


2Q 11

Sales of automobiles





  Beijing


583,122


571,142

  Outside Beijing


126,734


-

Total


709,856


571,142






Repair and maintenance services          





  Beijing


48,922


79,176

  Outside Beijing


15,667


-

Total


64,589


79,176




Percent of Total Revenues

Product Line


2Q 12


2Q 11

Sales of automobiles


89.6%


87.4%

Automobile repair and maintenance services


8.1%


12.1%

Sales of leased automobiles


1.5%


-

Other services


0.8%


0.5%

Total


100%


100%

Cost of goods sold increased 22.2% to RMB720.5 million ($113.4 million) in the second quarter of 2012 from RMB589.5 million in the same period of 2011 as a result of higher revenue and sales volumes, driven in part by the addition of the five new dealerships.

Gross profit increased 11.9% to RMB71.9 million ($11.3 million) in the second quarter of 2012, an increase from RMB64.3 million in the second quarter of 2011. This was mainly due to the increase in revenue.

Overall gross margin for the second quarter of 2012 decreased to 9.1% from 9.8% in the second quarter of 2011. Specifically, the gross margin for automobile sales increased to 5.1% in the second quarter of 2012 from 3.9% in the same period of 2011, while the gross margin of repair and maintenance services increased to 52.3% as compared to 48.8% for the same period in 2011. Overall gross margin decreased during the second quarter of 2012 as revenues from car sales, which generate lower margins than maintenance and repairs, increased significantly and accounted for a larger share of total revenues. Gross margin for automobile sales increased mainly due to the higher profits resulting from the more generous rebate policies adopted by the vehicle manufacturers to maintain market share. Gross margin for repair and maintenance services increased primarily due to the increased proportion of revenue from the Company's high-end brand dealerships which typically have higher gross margins.  

Selling, marketing and distribution expenses increased 20.8% to RMB24.1 million ($3.8 million) in the second quarter of 2012 from RMB19.9 million during the same period of 2011, primarily as a result of the Company's dealership expansion. As a percentage of revenues, selling, marketing and distribution expenses was 3.0%, remaining the same from 3.0% in the second quarter of 2011.

General and administrative expenses increased by 80.3% to RMB16.1 million ($2.5 million) in the second quarter of 2012 from RMB8.9 million during the same quarter of 2011, primarily due to the hiring of additional staff to support growth and increased travel expenses for dealerships located outside Beijing. As a percentage of revenues, general and administrative expenses increased to 2.0% in the second quarter of 2012, an increase from 1.4% in the second quarter of 2011.

Operating income for the second quarter of 2012 decreased 10.4% to RMB31.7 million ($5 million) from RMB35.4 million for the same period in 2011. The change in operating income was primarily the result of increased expenses.

Operating margin for the second quarter of 2012 was 4.0%, compared to 5.4% for the same quarter in 2011. The decrease in operating margin was primarily attributable to a decrease in overall gross margin and increased expenses as a percentage of revenue.

Net income attributable to controlling interest was RMB8.4 million ($1.3 million), a decrease of 28.4% from RMB11.8 million for the same period in 2011.

Basic and diluted earnings per ordinary share were RMB0.14 ($0.02) for the second quarter of 2012 compared to RMB0.20 for the second quarter of 2011, decreasing 30.0%. This translates to basic and diluted earnings per ADS of RMB0.28 ($0.04) in the second quarter of 2012.  Each ADS represents two ordinary shares. Weighted average ordinary shares outstanding in the second quarter of 2012 remained unchanged from one year ago at 58,937,912.

Liquidity and capital resources

As of June 30, 2012, the Company had cash and cash equivalents of RMB92.2 million ($14.5 million), compared to RMB161.4 million as of December 31, 2011.

Expansion Strategy Update

The Company remains focused on three regions that it believes offer the best economic returns currently:  Northeast, Southeast and Southwest China. These regions present numerous opportunities for expansion in second and third-tier cities where a growing number of middle class Chinese enjoy rising standards of living. As acquisitions are expected to become more expensive, the Company has shifted its focus to organic growth and will concentrate on opening greenfield dealerships.

The opening of the new FAW-Volkswagen flagship store in Beijing is scheduled for the fourth quarter of 2012.

The Company announced in July that it had received approval from FAW-Volkswagen Audi to build a new 4S Audi dealership in south Beijing, further strengthening the relationship between Lentuo and FAW Group.

To help facilitate the Company's expansion, Lentuo has signed a comprehensive cooperation agreement with FAW Auto Finance Co. Ltd. ("FAW-AF"), a subsidiary of the FAW Group. Under the terms of the agreement, FAW-AF will help finance Lentuo's 4S greenfield dealership network expansion in China. Lentuo is the first automobile retailer in China to sign such an agreement with FAW-AF.

  Conference Call

Lentuo's management will host a conference call to discuss the results at 8:00 a.m. Eastern Daylight Time on September 25, 2012 (8:00 p.m. Beijing time on the same day).

The dial-in details for the live conference call are:

U.S. Toll Free

+1 877-941-1427

International Dial In

+1 480-629-9664

A telephone replay of the call will be available after the conclusion of the conference call at 11:00 a.m. Eastern Daylight Time on September 25, 2012 through 11:59 p.m. Eastern Daylight Time on October 9, 2012. The dial-in details for the replay are:

U.S. Toll Free

+1 877-870-5176

International Dial In:

+1 858-384-5517

Passcode:

4565489

A live webcast of the conference call will be available on the investor relations section of Lentuo's website at: http://ir.lentuo.net or alternately at http://ViaVid.net.

Exchange Rate

This announcement contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars were made at the exchange rate of RMB 6.3530 to US $1.00, as set forth in the H.10 statistical release of the Federal Reserve Board on June 30, 2012.

About Lentuo International Inc.

Lentuo is a leading non-state-owned automobile retailer headquartered in Beijing. Lentuo operates 11 franchise dealerships, 10 automobile showrooms, one automobile repair shop, and one car leasing company.

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "going forward," "outlook" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control, which may cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

For more information, please contact:

Ms. Jennifer Chen
CFO
Lentuo International Inc.
Email: chenjianping@lentuo.net

Christensen
Mr. Christian Arnell
Telephone +86 10 5826 4939 in Beijing
Email: carnell@christensenir.com

Ms. Linda Bergkamp
Phone:  +1-480-614-3004 (U.S.A.)
Email: lbergkamp@christensenir.com

Lentuo International Inc.

Consolidated Statements of Income and Comprehensive Income

(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"), except for number of shares

and per share data)


For the three months ended


June 30, 2011


June 30, 2012


RMB


RMB


 US$

Revenues






  Sales of automobiles

571,142


709,856


111,736

  Automobile repair and maintenance services

79,176


64,589


10,167

  Sales of leased automobiles

-


11,585


1,824

  Other services

3,490


6,454


1,016

Total revenues

653,808


792,484


124,743







Cost of goods sold






  Sales of automobiles

(548,901)


(673,874)


(106,072)

  Automobile repair and maintenance services

(40,519)


(30,834)


(4,853)

  Sales of leased automobiles

-


(15,492)


(2,439)

  Other services

(76)


(335)


(53)

Total cost of goods sold

(589,496)


(720,535)


(113,417)







Gross profit

64,312


71,949


11,326







Operating expenses






  Selling, marketing and distribution expenses

(19,935)


(24,087)


(3,791)

  General and administrative expenses

(8,942)


(16,123)


(2,538)

Total operating expenses

(28,877)


(40,210)


(6,329)







Operating income

35,435


31,739


4,997







Interest income

242


2,566


404

Interest expenses

(12,397)


(20,029)


(3,153)

Exchange gain/ loss

(5,225)


46


7

Other income, net

600


696


110







Income before income tax expenses

18,655


15,018


2,365

Income tax expenses

(6,871)


(6,321)


(995)







Net income and comprehensive income

11,784


8,697


1,370

Net income and comprehensive income attributable to non-controlling interest

-


256


40







Net income and comprehensive income attributable to controlling interest

11,784


8,441


1,330







Earnings per ordinary share:






Basic and diluted earnings per ordinary share

0.20


0.14


0.02







Weighted average ordinary shares outstanding:






Basic and diluted

58,937,912


58,937,912


58,937,912



Lentuo International Inc.

Consolidated Balance Sheets

(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"), except for number of shares
and per share data)




December 31 , 2011




June 30, 2012


RMB




RMB


 US$

Assets








Current assets








  Cash and cash equivalents

161,393




92,154


14,506

  Restricted cash

435,770




248,694


39,146

  Accounts receivable (net of allowance for doubtful
  accounts of nil as of December 31, 2011 and June 30, 2012)

48,961




23,412


3,685

  Inventories, net

516,256




541,465


85,230

  Leased automobiles held for sale, net

147,749




150,621


23,709

  Advances to suppliers

219,936




262,629


41,339

  Prepaid expenses and other current assets

265,199




243,100


38,265

  Amounts due from related parties

74,857




70,739


11,135

  Deferred tax assets

6,062




6,817


1,073

Total current assets

1,876,183




1,639,631


258,088









Non-current assets








  Property and equipment, net

325,308




467,228


73,544

  Land use rights, net

18,821




18,538


2,918

  Intangible assets, net

135,067




134,067


21,103

  Goodwill

73,634




73,634


11,590

  Long-term prepayments

137,750




23,500


3,699

  Long-term investment

-




11,250


1,771

  Deferred tax assets

4,112




7,526


1,185

Total non-current assets

694,692




735,743


115,810









Total assets

2,570,875




2,375,374


373,898









Liabilities and Stockholders' Equity








Current liabilities








  Accounts payable

12,568




6,686


1,052

  Bills payable

889,158




611,101


96,191

  Advances from customers

47,990




41,162


6,479

  Deposits from third parties





-


-

  Accrued expenses and other current liabilities

329,468




350,329


55,144

  Amounts due to related parties

10,000




-


-

  Unrecognized tax benefits

4,963




4,963


781

  Taxes payable

33,562




45,924


7,229

  Short-term loans

370,883




418,471


65,870

Total current liabilities

1,698,592




1,478,636


232,746









Non-current liabilities








  Deferred tax liabilities

39,193




38,858


6,116

Total non-current liabilities

39,193




38,858


6,116









Total liabilities

1,737,785




1,517,494


238,862









Shareholders' Equity








  Ordinary shares, par value US$0.00001 per share








Authorized – 500,000,000 shares as of  June 30, 2012 and December 31, 2011 Issued and outstanding –58,937,912 shares as of June 30, 2012 and December 31, 2011

4




4


1

  Additional paid-in capital

469,761




469,761


73,943

  Retained earnings

334,605




359,812


56,637









Total equity for controlling interest

804,370




829,577


130,581

Non-controlling interest

28,720




28,303


4,455

Total shareholder's equity

833,090




857,880


135,036









Total liabilities and stockholder's equity

2,570,875




2,375,374


373,898

 

SOURCE Lentuo International Inc.

Related Stocks:
Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here