ZHAOYUAN CITY, China, May 15, 2009 (GLOBE NEWSWIRE) -- China Shuangji Cement Ltd. (OTCBB:CSGJ) ("China Shuangji" or the "Company"), a leading producer of high grade cement in China, announced today that it has reported results for the fiscal year ended on December 31, 2008.
Fiscal Year 2008 Highlights:
-- Revenues totaled $56.4 million, up 10.83% from the fiscal year
2007
-- Gross Profits totaled $8.7 million, up 3.38% from the fiscal year
2007
-- Operating Income totaled $7.27 million, up 5.6% from the fiscal
year 2007
-- Other Income totaled $20.3 million, up from $0.867 million from
the fiscal year 2007 which includes concessions of $13.4 million
in loan forgiveness from our banks
-- Net Income before taxes during the fiscal 2008 was $27.6 million
-- Net Income during the fiscal 2008 was $26.1 million, or $0.97 per
share
Fiscal Year 2008 Results:
Net revenues for the fiscal year ended December 31, 2008 increased $5,510,313, or 10.83%, to $56,412,513 from $50,902,200 for the comparable period in 2007. During the 2008 period, our cement sales increased from 1,538,587 metric tons to 1,607,954 metric tons, or approximately 4.51% increase from the prior year. This increase was due to the overall increase in demand for our cement products, particularly in China. The increase in revenue was due to increased demand, coupled with the favorable effect of changes in foreign exchange conversion rates.
Cost of sales for the fiscal year ended December 31, 2008 increased $5,226,888, or 12.30%, to $47,736,905 from $42,510,017 for the comparable period in 2007. The increase was due to the higher costs of raw materials, principally coal and electrical power, for our cement products, along with higher production levels. Cost of sales as a percentage of total sales was 84.6% for the 2008 fiscal period compared with 83.5% for the comparable 2007 period. The difference represents an increase of 1.1% which is due to the high costs for raw materials which were not offset by higher product prices.
Gross profit for the fiscal year ended December 31, 2008 increased $283,425 or 3.38%, to $8,675,608 from $8,392,183 for the comparable period in 2007. The increase is due to the reasons discussed above.
Operating income was $7,268,515 for the fiscal year ended December 31, 2008, compared with $6,879,228 for the fiscal year ended December 31, 2007, representing a 5.6% increase. The increase in operating income for the 2008 period is due to the increase in gross profit discussed above and a reduction in selling and administrative expenses.
During the 2008 period, we recorded $13,395,095 in debt forgiveness. We had outstanding loans with a bank that was a former owner of the Danzhou cement plant that we acquired in 2002. During 2008, the bank accepted $5,027,110 and forgave $13,395,095 in outstanding loans. We did not have a similar transaction during 2007. During 2008, the City of Zhaoyuan requested we relocate our existing plant to a new site within the City. As partial consideration for the relocation, the City agreed to pay us the sum of $13,645,014 (RMB 95,000,000) of which $5,027,110 (RMB 35,000,000) was paid during 2008. We also received leasehold rights to the new location with an appraised value of $2,369,350 (RMB 16,240,000) subject to the payment of $1,458,960 (RMB 10,000,000) to the former holders of rights to the land. After deducting other amounts related to the relocation, the net profit from the transactions was $8,250,865. During the 2008 fiscal period, we had a decrease in subsidy income of $354,115 from $476,428 for the comparable period in 2007. During these two periods, 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. During the fiscal 2008 period, we had other income of $1,446 compared with $452 for the 2007 period. Interest expense, which represents interest on outstanding loans, for the fiscal year ended December 31, 2008 was $1,410,970 compared to $1,264,144 for the fiscal year ended December 31, 2007. The increase of $146,826, or 11.61% is due to higher interest rates on outstanding debt.
Income before income taxes was $27,612,735 for the fiscal year ended December 31, 2008, compared to income before income taxes of $6,011,743 for the fiscal year ended December 31, 2008. The increase of $21,600,992 was due to the reasons discussed above.
Income taxes decreased $366,732, or 19.7%, to $1,493,258 for the fiscal year ended December 31, 2008, compared to $1,859,990 for the fiscal year ended December 31, 2007. The decrease is primarily due to a decrease in the corporate income tax rate in PRC. The corporate income tax rate for 2008 decreased to 25% from 33%.
Net income was $26,119,477 for the fiscal year ended December 31, 2008, compared to $4,151,753 for the fiscal year ended December 31, 2007, an increase of $21,967,724.
Financial Condition:
As of December 31, 2008, China Shuangji Cement had $504,599 in total cash, approximately $15.96 million in working capital, and $1.95 million in bank loans. Shareholder's equity at the end of the fiscal year 2008 stood at $30.91 million, compared to $9.11 million recorded at the end of 2007.
Business Outlook:
The Company is currently building a new 1 million metric ton cement plant outside Zhaoyuan City to replace the old Zhaoyuan plant and will be completed in July 2009. The Company acquired fifty-one percent ownership in a 300,000 metric ton plant in nearby Longkou, Shandong in April 2009 and will upgrade capacity to 500,000 metric tons by July 2009.
"We foresee positive business sales in the fiscal first quarter and beyond due to the Chinese Government decision to shut down a collection of small cement plants by the end of 2010 and the Chinese Government's recently announced 4-trillion-RMB ($586 billion) economic stimulus plan. This will result in expanding our cement market and increased commodity price for cement," stated Mr. Song.
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.
Forward-looking Statements:
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.