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China Shuangji Cement Announces Second Quarter 2009 Results
Aug 21, 09 11:20AM
ZHAOYUAN CITY, China, Aug. 21, 2009 (GLOBE NEWSWIRE) -- China Shuangji Cement Ltd. (OTCBB:CSGJ - News; "China Shuangji" or the "Company"), a leading producer of high grade cement in China, announced today announced a sharp jump in net income in its second quarter ended June 30, 2009 ("Q2 2009") compared with the same quarter last year despite a decline in year over year revenues in the period.
Net income was $1,127,075 for the three month period ended June 30, 2009, compared to $889,479 for the three month period ended June 30, 2008, an increase of $237,596, or 26.7%. The increase is primarily due to the reduction in interest expenses from the forgiveness of a $13,395,095 loan by our major lending bank which occurred during the fiscal 2008 year as a result of the relocation of our Zhaoyuan cement plant.
Revenues for the six month period ended June 30, 2009 decreased $2,043,899, or 7.52%, from $25,146,528 to $27,190,427 for the comparable period in 2008. During the 2009 period, our cement sales decreased approximately 6.93% from 728,600 metric tons to 678,100 metric tons from the prior period, and our cement production decreased 8.44% from 723,640 metric tons to 662,540 metric tons from the prior period. This decrease tonnage was due to the shutdown and relocation of the Zhaoyuan cement plant at the beginning of the year. The decrease in revenues is due to the loss of production from the Zhaoyuan plant which was offset partially by sales from inventory and production from the new Longkou Cement plant.
Earnings per share (basic and diluted) applicable to our common stock were $0.17 per share for the three month period ended June 30, 2009 compared with $0.13 for the three month period ended June 30, 2008.
As of June 30, 2009, China Shuangji Cement had $616,670 in total cash, approximately $13.18 million in working capital, and $944,723 in bank loans. Shareholder's equity at the end of the June 30, 2009 stood at $33.06 million, compared to $30.91 million recorded at the end of 2008.
Q2 2009 Results
Revenues for the three month period ended June 30, 2009 decreased $1,906,075, or 12.25%, from $15,553,503 to $13,647,428 for the comparable period in 2008. During the 2009 period, our cement sales decreased approximately 10.74% from 418,800 metric tons to 373,800 metric tons from the prior period, and our cement production decreased 9.42% from 413,880 metric tons to 374,890 metric tons from the prior period.
The cost of sales for the three month period ended June 30, 2009 decreased $1,901,801, or 13.83%, from $13,750,873 to $11,849,072 for the comparable period in 2008. The decrease was due to the lower production levels. Cost of sales as a percentage of total sales was 86.8% for the 2009 period compared with 88.4% for the comparable 2008 period.
Gross profit for the three month period ended June 30, 2009 decreased $4,274 or 0.24%, from $1,802,630 to $1,798,356 for the comparable period in 2008.
Selling and Administrative Expenses for the three month period ended June 30, 2009 decreased $9,270, or 5.33%, from $173,973 to $164,703 for comparable period in 2008.
Operating income was $1,633,653 for the three month period ended June 30, 2009 compared with $1,628,657 for the three month period ended June 30, 2008, representing a 0.31% increase.
During the 2009 period, we had no subsidy income compared to the $2,440 subsidy income for the comparable period in 2008. During the last two fiscal years, we are eligible for refund of value added taxes under a materials utilization program of the Shandong Economic and Trades Commission. This program encourages use in the manufacturing process of materials which might otherwise be discarded. It is available only for production at the Zhaoyuan plant and will continue into 2009. Interest expense, which represents interest on outstanding loans, for the three month period ended June 30, 2009 was $22,698 compared to $385,010 for the three month period ended June 30, 2008. The decrease of $362,312, or 94.1%, is due to the forgiveness of a $13,395,095 loan by our major lending bank which occurred during the fiscal 2008 year as a result of the relocation of our Zhaoyuan plant.
Income before income taxes was $1,585,896 for the three month period ended June 30, 2009, compared to income before income taxes of $1,245,531 for the three month period ended June 30, 2008. The increase of $340,365, or 27.3%, was due to the reasons discussed above.
We are currently building a new 1 million metric ton cement plant outside Zhaoyuan City to replace the old Zhaoyuan plant and will be completed in late Q3 2009. In addition, on April 15, Zhaoyuan Shuangji Co., Ltd. ("Zhaoyuan Shuangji"), the subsidiary that operates in China, concluded a joint venture agreement with Longkou Bahai Cement Co. Ltd ("Bahai") under which Zhaoyuan Shuangji became a 51% owner of a new company, Longkou Shuangji Cement Co. Ltd. ("Longkou"). Longkou was formed by the contribution of $570,000 in cash by Zhaoyuan Shuangji and a contribution by Bahai of the equipment formerly used by Bahai to operate a cement factory in Shandong Province. The Company is committed to contribute an additional $891,000 to the capital of Longkou, as needed. The new company has an annual capacity to produce 500,000 tons of cement.
In 2009, we acquired fifty-one percent of a joint venture that owns in a 300,000 metric ton plant in nearby Longkou, Shandong. We plan to upgrade that capacity to 500,000 metric tons by July 2009. Due to the closure of the old Zhaoyuan plant, we have experienced a 8.44% decrease in tonnage production during the first six months of 2009 from the prior period.
We foresee positive business sales in the fiscal third quarter and beyond due to a Chinese government decision to shut down a collection of small cement plants by the end of 2010 and from the recently announced 4 trillion RMB stimulus program by the PRC government. We expect that this program will result in increased demand for cement and may increase commodity price for cement.
About China Shuangji Cement, Ltd.
China Shuangji Cement, Ltd., through its affiliates and controlled entities, is a supplier of high-grade cement to the industrial sector in the People's Republic of China and to international markets. Its processed cement products are primarily purchased by the cement industry for the purpose of making the cement required for the construction of buildings, roads, and other infrastructure projects. The Company currently produces 1,300,000 tonnes of Portland cement annually. Our output will increase by 1,200,000 tonnes in 2009 when our new plant is completed (1,000,000 tonnes) and when the capacity of our recently acquired joint venture plant is upgrade (200,000 tonnes).
The information contained herein includes forward-looking statements. These statements relate to future events or to our future anticipated financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We do not intend to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act. In addition, please refer to the Risk Factor section of our 2008 Form 10--K filed with the Securities and Exchange Commission on May 13, 2009.
China Shuangji Cement, Ltd. Wenji Song, Chairman & President firstname.lastname@example.org www.shuangjicement.com