ZHEJIANG, China, March 27 /Xinhua-PRNewswire/ -- SORL Auto Parts, Inc. (OTC:SAUP) (BULLETIN BOARD: SAUP) , a leading manufacturer and distributor of commercial vehicle air brake valves in China, today announced its financial results for the fourth quarter and fiscal year 2005. Fiscal Year 2005 Financial Highlights -- Fiscal year 2005 revenue increased to US$64.2 million, reflecting 37.1% year-over-year growth. -- Fiscal year 2005 net income increased to US$4.9 million, reflecting 3.0% year-over-year growth. -- Fiscal year 2005 diluted earnings per share was US$0.37 in line with US$0.37 in 2004. Xiaoping Zhang, SORL Auto Parts' Chairman and CEO, said, "This was a successful year for SORL as measured by growth in our revenues, aftermarket sales, and exports. We have maintained our leading position in air brake valves for heavy-duty vehicles in China. We are accomplishing our goal of expanding globally and further penetrating the market in multiple arenas. Importantly, we have achieved a healthy balance among three business sectors: domestic OEM, domestic aftermarket and export. During 2005, due to Chinese government regulation, the heavy duty truck market experienced a correction after eight years of continuous growth. Most heavy duty truck manufacturers suffered a substantial decrease in sales volume due to sluggish domestic demand but we were able to increase our sales by expanding both our domestic aftermarket and export businesses." Revenue for fiscal year 2005 was US$64.2 million, a 37% increase as compared to US$46.8 million for fiscal year 2004. OEM revenue for fiscal year 2005 was US$20.6 million, a 6.4% decrease as compared to US$22.0 million for fiscal year 2004. Aftermarket revenue in fiscal year 2005 was US$20.2 million, an increase of 65.7% as compared to US$12.2 million for fiscal year 2004. Revenue from exports was US$23.4 million in fiscal year 2005, an increase of 83% as compared to US$12.6 million in fiscal year 2004. In fiscal year 2005, nearly all export sales were from the overseas aftermarket. In 2005, SORL's clutch boosters and spring brake chambers were accepted by Tata Motors, the largest automobile manufacturer in India. A small number of trial orders were placed by Tata Motors in 2005. Income from operations for fiscal year 2005 was US$5.5 million, an increase of 2.6% as compared to US$5.4 million for fiscal year 2004. Net income for fiscal year 2005 was US$4.95 million or US$0.37 earnings per share, an increase of 3% as compared to a net income of US$4.81 million or US$ 0.37 earnings per share for fiscal year 2004. Fourth Quarter Financial Highlights -- Revenue increased to US$18.4 million, reflecting 33.2% year-over-year growth. -- Net income decreased to US$0.57 million, reflecting 55.3% year-over- year decline. -- Fourth quarter earnings per share decreased to US$0.04, reflecting 60% year-over-year decline from US$0.1 in the fourth quarter of 2004. Revenue for the fourth quarter of 2005 was US$ 18.4 million, a 33.6% increase as compared to US$13.8 million for the same period in 2004. Revenues from OEM, aftermarket and international market for the fourth quarter of 2005 were US$4.4 million, US$6.9 million and US$7.1 million, respectively. In the fourth quarter of 2005, nearly all export sales were for the overseas aftermarket. Income from operations for the fourth quarter of 2005 was US$0.94 million, a decrease of 36.1% as compared to US$1.47 million in the same period in 2004. Net income for the fourth quarter of 2005 was US$0.57 million or US$0.04 earnings per share, a decrease of 55.3% as compared to net income of US$1.27 million or US$0.10 earnings per share in the same period in 2004. Chief Financial Officer Zongyun Zhou said, "The increase in selling, general and administrative expenses made impact to our fourth quarter and full year net income. During the fourth quarter of 2005, a significant adjustment in the amount of $794,000 was made to provide for potentially uncollectible accounts. That change was necessitated by the temporary extension of special credit terms to certain domestic customers. While being prudent in our accounting practices, we feel comfortable in final successful collection of those receivables based on our long-term good relationships and satisfactory track records with these customers, basically large state-owned automobile manufacturers. In our effort to expand rapidly in the international market, we also increased the sales and distribution expenses. We believe that our focus on the international market will eventually pay off." Business Outlook Mr. Xiaoping Zhang concluded, 'We believe 2006 will be an opportunity for heavy duty vehicle OEM manufacturers to recover because the Ministry of Construction has proposed to complete its massive network of national highways in time for the 2008 Olympics Games. On the export side, we expect a 20-25% growth in the aftermarket replacement arena using our authorized sales centers in Australia, United Arab Emirates and United States. Tata Motors' regular orders for the two kinds of air brake valves will commence in the first half of 2006. We believe that the sales to Tata Motors will be the first step for us to expand into the international OEM market.' About SORL Auto Parts, Inc. As China's leading manufacturer and distributor of automotive air brake valves, SORL Auto Parts, Inc. ranks first in market share in the segment for commercial vehicles weighing more than three tons, such as trucks and buses. The Company distributes products both within China and internationally under the SORL trademark. SORL ranks among the top 100 auto component suppliers in China, with a product range that includes 40 types of air brake valves and over 800 different specifications. The Company has three authorized international sales centers in Australia, United Arab Emirates, and the United States, with additional offices slated to open in other locations in the near future. Safe Harbor Statement Statements made in this press release that are not historical fact are 'forward-looking statements," which are based on current expectations that include a number of risks and uncertainties. Additional factors that could potentially affect the Company's financial results may be found on the Company's filings with the Securities and Exchange Commission ( http://www.sec.gov/ ). For more information, please contact: David Ming He SORL Auto Parts, Inc. Tel: +86-577-6581-7720 Email: Christopher Chu The Global Consulting Group Tel: +1-646-284-9426 Email: DATASOURCE: SORL Auto Parts, Inc. CONTACT: David Ming He of SORL Auto Parts, Inc., +86-577-6581-7720, or Web site: http://www.chinaautomotivesystems.com/ http://www.sec.gov/

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