Lentuo International Announces Second Quarter 2013 Financial Results

     Lentuo International Announces Second Quarter 2013 Financial Results

PR Newswire

BEIJING, Sept. 12, 2013

BEIJING, Sept. 12, 2013 /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, 2013.

Second Quarter 2013 Financial Highlights

  oNet income increased 152.9% to RMB21.3 million ($3.5 million), from net
    income of RMB8.4 million in the second quarter of 2012.
  oOverall gross margin of repair and maintenance services reached 12.1%, up
    from 9.1% in the second quarter of 2012.
  oRepair and maintenance revenue as a proportion of total revenue increased
    to 12.7% from 8.1% in the second quarter 2012.
  oRevenues decreased 4.1% to RMB760.3 million ($123.9 million), from
    RMB792.5 million in the second quarter 2012.
  oVehicles sold decreased 7.6% to 3,973 vehicles, from 4,301 vehicles in the
    second quarter 2012 while gross margin for new car sales increased to 6.5%
    from 5.1% in the second quarter of 2012.
  oVehicles serviced increased 8.3% to 49,650 vehicles, from 45,843 vehicles
    in the second quarter 2012.

"I am pleased to report a significant increase in our profits year-over-year
as we return to profitability after losses in the previous three quarters,"
commented Mr. Hetong Guo, Founder and Chairman of Lentuo. "This is the result
of our continued strategic focus on the high-end car market and expansion of
our after sales services. These results are indicative of our ability to
capitalize on the long-term fundamentals of China's auto industry and our
determination to see our strategy through."

"We expect to see our operational and financial performance continue to align
with our solid fundamentals as exciting new projects grow to scale such as our
recently opened and fully operational FAW-Volkswagen flagship store and
pre-owned car center in Beijing. Our joint-venture project with Itochu
Corporation has also begun operating and leveraging the substantial financial
and managerial resources Itochu has to offer as it seeks to capitalize on the
growing demand for premium cars in China. Additionally, we signed a letter of
intent with Hailin government to jointly develop the Hailin City Auto Mall
which also marks another important step in our growth strategy as we expand
our presence outside Beijing and develop our brand equity."

Mr. Hetong Guo concluded, "In summary, we are excited about the opportunities
that lie ahead. We have further solidified our position and ability to compete
in this highly competitive market with the execution of our strategy and focus
on greenfield expansion. The additional resources provided by our milestone
agreements with Itochu and First Automobile Finance have assisted us in
establishing and creating new revenue streams which we fully intend to
capitalize on. I look forward to fully leveraging these initiatives as we seek
to deliver sustainable growth over the long-term."

Second Quarter 2013 Financial Performance

Revenues for the three months ended June 30, 2013 decreased by 4.1% to
RMB760.3 million ($123.9 million) from RMB792.5 million in the second quarter
of 2012.

Revenues from automobile sales decreased by 9.3% to RMB644.0 million ($104.9
million) during the second quarter of 2013 from RMB709.9 million during the
same period in 2012. The Company sold 3,973 vehicles, a 7.6% decrease from
4,301 vehicles in the second quarter of 2012. For several quarters, the
Company had aggressively responded to increasing competition with promotional
campaigns in order to protect and expand its customer base. That having been
accomplished, the Company has felt confident enough, despite continuing strong
competition, to start adjusting its strategy during the second quarter and
focus on improving profitability at the cost of absolute unit sales.

The average new vehicle unit price for the second quarter of 2013 was
RMB164,716 ($26,838), a 1.8% decrease from RMB167,730 in the same period in
2012 but up 7.4% from RMB153,299 in the first quarter of 2013.

Revenues from repair and maintenance services in the second quarter of 2013
increased by 49.6% to RMB96.6 million ($15.7 million) from RMB64.6 million
during the same period in 2012. The Company serviced 49,650 vehicles during
the three months ended June 30, 2013, an 8.3% increase from the 45,843
vehicles serviced in the second quarter of 2012. The increase in revenues from
repair and maintenance services was primarily due to a number of marketing and
promotional campaigns launched by the Company in order to promote its service
offerings and improve customer satisfaction. The increase was also partially
due to the optimization of the Company's service offering mix within repair
and maintenance services towards higher-priced products which tend to
contribute more to profits such as severe accident repair services.

                                 Revenues
                                 (in thousands of Renminbi)
                                 2Q 13           2Q 12       % Increase
                                                             (Decrease)
Sales of automobiles
 Beijing                        540,156         583,122     (7.4)%
 Outside Beijing                103,850         126,734     (18.1)%
Total                            644,006         709,856     (9.3)%
Repair and maintenance services
 Beijing                        78,403          48,922      60.3%
 Outside Beijing                18,209          15,667      16.2%
Total                            96,612          64,589      49.6%



                                 Revenues
                                 (in thousands of Renminbi)
                                 2Q 13           2Q 12       % Increase
                                                             (Decrease)
Sales of automobiles
 German Branded                 413,479         463,780     (10.8)%
 Japanese Branded               230,527         246,076     (6.3)%
Total                            644,006         709,856     (9.3)%
Repair and maintenance services
 German Branded                 62,714          39,820      57.5%
 Japanese Branded               33,898          24,769      36.9%
Total                            96,612          64,589      49.6%



                                   PercentofTotalRevenues
Revenue Category                   2Q 13           2Q 12
Sales of automobiles               84.7%           89.6%
Automobile repair and maintenance  12.7%           8.1%
services
Sales of leased automobiles        1.4%            1.5%
Other services                     1.2%            0.8%
Total                              100%            100%

Cost of goods sold decreased by 7.3% to RMB668.0 million ($108.8 million) in
the second quarter of 2013 from RMB720.5 million in the same period of 2012 as
a result of lower revenue.

Gross profit increased by 28.2% to RMB92.2 million ($15.0 million) in the
second quarter of 2013 from RMB71.9 million in the same quarter of 2012. The
increase in gross profit was mainly due to the increase in overall gross
profit margin.

Overall gross margin for the second quarter of 2013 increased to 12.1% from
9.1% in the second quarter of 2012. Specifically, the gross margin for
automobile sales increased to 6.5% in the second quarter of 2013 from 5.1% in
the same period of 2012, while the gross margin of repair and maintenance
services decreased to 40.0% as compared to 52.3% for the same period in 2012
but up from 33.9% in the first quarter of 2013. The increase in gross margin
for automobiles sales was primarily due to the optimization of the Company's
product mix towards higher-margin cars of the same brand. Gross margin for
repair and maintenance services declined primarily due to various promotional
campaigns launched by the Company aimed at increasing repair and maintenance
revenue as a proportion of total revenue. Overall gross margin increased due
to the increased contribution of repair and maintenance services revenue as a
proportion of total revenue.

Selling, marketing and distribution expenses increased by 7.6% to RMB25.9
million ($4.2 million) in the second quarter of 2013 from RMB24.1 million
during the same period of 2012. The increase was primarily due to additional
staff at the new dealerships and wage inflation. As a percentage of revenues,
selling, marketing and distribution expenses increased to 3.4% in the second
quarter of 2013 from 3.0% in the second quarter of 2012.

General and administrative expenses increased by 3.3% to RMB16.6 million ($2.7
million) in the second quarter of 2013 from RMB16.1 million during the same
quarter of 2012. The increase was primarily the result of the addition of
staff for the new dealerships. As a percentage of revenues, general and
administrative expenses increased to 2.2% in the second quarter of 2013 from
2.0% in the second quarter of 2012.

Operating income for the second quarter of 2013 was RMB49.7 million ($8.1
million), an increase of 56.5% from RMB31.7 million for the same period in
2012.

Operating margin for the second quarter of 2013 was 6.5%, compared to 4.0% for
the same quarter in 2012. The increase in operating margin was primarily
attributable to the 300 basis point increase in overall gross margin and the
60 basis point increase in operating expenses as a percentage of revenue.

Net income attributable to controlling interest increased 152.9% to RMB21.3
million ($3.5 million)during the second quarter of 2013 from RMB8.4 million
for the same period in 2012.

Basic and diluted earnings per ordinary share were RMB0.36 ($0.06) for the
second quarter of 2013 compared to basic and diluted earnings per ordinary
share of RMB0.14 for the second quarter of 2012. This translates into basic
and diluted earnings per ADS of RMB0.72 ($0.12) in the second quarter of 2013.
Each ADS represents two ordinary shares. Weighted average ordinary shares
outstanding in the second quarter of 2013 remained unchanged from one year ago
at 58,937,912.

Liquidity and Capital Resources

As of June 30, 2013, the Company had cash and cash equivalents of RMB323.7
million ($52.7 million), compared to RMB318.9 million as of December 31, 2012.

Expansion Strategy Update

Lentuo's new FAW-Volkswagen flagship store in Beijing officially opened in
mid-July and is performing up to expectations.

Lentuo's centralized pre-owned car center housed within the FAW-Volkswagen
flagship store has also officially opened and has begun selling used vehicles
and providing other value-added services. The pre-owned car center will
consolidate and centralize the pre-owned car business activities previously
managed by individual dealerships and bring them under the management of
Lentuo's headquarters. As the Company continues its dealership expansion
outside Beijing, the pre-owned car business will span across various regions
enabling low-end vehicles traded-in at Lentuo's Beijing dealerships to be sold
in tier two and tier three cities in China.

Lentuo signed a letter of intent with the Hailin Economic and Technological
Development Zone in Hailin City, Heilongjiang Province, China to jointly
develop the Hailin-Lentuo Auto Mall. The Hailin-Lentuo Auto Mall will include
numerous full-service 4S[1] dealerships from some of the world's leading
brands with a large inventory of new and pre-owned cars, state-of-the-art
showrooms, repair and maintenance service centers, vehicle insurance vendors,
leasing services, auto parts, carwash services, etc. 

The Company's joint venture agreement with Itochu, a Fortune Global 500
company, has received all necessary government approvals and has become
operational. The joint-venture will focus on the expansion of Lentuo's
high-end car dealerships across China, starting with the new Audi 4S
dealership under construction in southern Beijing. The joint-venture will also
scale up its higher margin repair and maintenance services.

Conference Call

Lentuo's management will host a conference call to discuss the results at 8:00
a.m. Eastern Daylight Time on September 12, 2013 (8:00 p.m. Beijing time on
the same day).

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

U.S. Toll Free        +1 877-941-2068
International Dial In +1480-629-9712

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 12, 2013
through 11:59 p.m. Eastern Daylight Time on September 19, 2013. The dial-in
details for the replay are:

U.S. Toll Free         +1877-870-5176
International Dial In: +1858-384-5517
Passcode:              4638997

A live webcast of the conference call will be available on the investor
relations section of Lentuo's website at: http://lentuo.investorroom.com/ 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 ofRMB 6.1374to US$1.00, as set forth in the H.10
statistical release of the Federal Reserve Board onJune 28, 2013.

About Lentuo International Inc.

Lentuo is a leading non-state-owned automobile retailer headquartered in
Beijing. Lentuo operates 12 franchise dealerships, 10 automobile showrooms,
one automobile repair shops 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.JiangyuLuo
Acting CFO
Lentuo International Inc.

Email:luojiangyu@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$"), except for
number of shares and per share data)
                            For the three months ended
                            Jun 30, 2012        Jun 30, 2013
                            RMB                 RMB               US$
Revenues
 Sales of automobiles      709,856             644,006           104,931
 Automobile repair and     64,589              96,612            15,742
maintenance services
 Sales of leased           11,585              10,412            1,696
automobiles
 Other services            6,454               9,264             1,509
Total revenues              792,484             760,294           123,879
Cost of goods sold
 Sales of automobiles      (673,874)           (601,922)         (98,074)
 Automobile repair and     (30,834)            (57,938)          (9,440)
maintenance services
 Sales of leased           (15,492)            (7,816)           (1,274)
automobiles
 Other services            (335)               (372)             (61)
Total cost of goods sold    (720,535)           (668,048)         (108,849)
Gross profit                71,949              92,246            15,030
Operating expenses
 Selling, marketing and    (24,087)            (25,923)          (4,224)
distribution expenses
 General and               (16,123)            (16,649)          (2,713)
administrative expenses
Total operating expenses    (40,210)            (42,572)          (6,936)
Operating income            31,739              49,674            8,094
Interest expenses           (17,417)            (17,084)          (2,784)
Other income, net           696                 (292)             (48)
Income before income tax    15,018              32,298            5,262
expenses
Income tax expenses         (6,321)             (10,300)          (1,678)
Net income and              8,697               21,998            3,584
comprehensive income
Net income and
comprehensive income        256                 651               106
attributable to
non-controlling interest
Net income and
comprehensive income        8,441               21,347            3,478
attributable to controlling
interest
Earnings per ordinary
share:
Basic and diluted earnings  0.14                0.36              0.06
per ordinary share
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$"), except for
number of shares and per share data)
                            December31,2012        Jun 30, 2013
                            RMB                      RMB             US$
Assets
Current assets
 Cash and cash equivalents 318,909                  323,685         52,740
 Restricted cash           437,875                  332,074         54,107
 Accounts receivable (net
of allowance for doubtful
 accounts of nil as of     41,399                   29,518          4,810
September 30, 2012 and
December 31, 2011)
 Inventories, net          432,722                  584,783         95,282
 Leased automobiles held   206,604                  235,805         38,421
for sale, net
 Advances to suppliers     316,067                  400,146         65,198
 Prepaid expenses and      35,148                   73,959          12,050
other current assets
 Amounts due from related  57,830                   120,600         19,650
parties
 Deferred tax assets       6,756                    9,776           1,593
Total current assets        1,853,310                2,110,346       343,850
Non-current assets
 Property and equipment,   560,700                  588,288         95,853
net
 Land use rights, net      18,256                   15,251          2,485
 Intangible assets, net    106,058                  107,811         17,566
 Goodwill                  73,634                   73,634          11,998
 Long-term prepayments     26,500                   26,500          4,318
 Long-term investment      11250                    11,250          1,832
 Deferred tax assets       9,624                    11,697          1,906
Total non-current assets    806,022                  834,431         135,958
Total assets                2,659,332                2,944,777       479,809
Liabilities and
Stockholders' Equity
Current liabilities
 Accounts payable          6,458                    23,911          3,896
 Bills payable             887,100                  654,987         106,721
 Advances from customers   49,974                   41,190          6,711
 Accrued expenses and      444,553                  473,464         77,144
other current liabilities
 Unrecognized tax benefits 4,963                    4,963           809
 Taxes payable             54,369                   44,078          7,182
 Short-term loans          365,274                  502,910         81,942
Total current liabilities   1,812,691                1,745,503       284,404
Non-current liabilities
 Long-term bank loans      0                        40,000          6,517
 Deferred tax liabilities  31,770                   31,364          5,110
Total non-current           31,770                   71,364          11,628
liabilities
Total liabilities           1,844,461                1,816,867       296,032
Shareholders' Equity
 Ordinary shares, par
value US$0.00001 per share
 Authorized-
500,000,000 shares as of
September
 30, 2012 and December
31, 2011 Issued and         4                        4               1
 outstanding-
58,937,912 shares as of
September
 30, 2012 and December
31, 2011
 Additional paid-in        469,761                  641,761         104,566
capital
 Retained earnings         329,147                  342,443         55,795
Total equity for            798,912                  984,208         160,362
controlling interest
Non-controlling interest   15,959                   143,702         23,414
Total shareholder's equity  814,871                  1,127,910       183,776
Total liabilities and       2,659,332                2,944,777       479,809
stockholder's equity

[1] 4S refers to authorized dealerships in China that provide Sales, Spare
parts, Service and Survey services.

SOURCE Lentuo International Inc.

Website: http://lentuo.investorroom.com/
Website: http://ViaVid.net
 
Press spacebar to pause and continue. Press esc to stop.