ZHAOYUAN CITY, China, May 26, 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 first quarter ended on March 31, 2009 ("Q1 2009").
Q1 2009 Results
Revenues for the three month period ended March 31, 2009 decreased $137,824, or 1.18%, from $11,636,924 to $11,499,100 for the comparable period in 2008. During the 2009 period, our cement sales decreased approximately 1.78% from 309,781 metric tons to 304,276 metric tons from the prior period, and our cement production decreased 7.14% from 309,768 metric tons to 287,645 metric tons from the prior period. This decrease tonnage was due to the shutdown and relocation of the Zhaoyuan plant as mentioned above. The decrease in revenues is due to the loss of production from the Zhaoyuan plant which was offset partially by sales from inventory.
The cost of sales for the three month period ended March 31, 2009 increased $396,768, or 4.09%, to $10,099,534 from $9,702,766 for the comparable period in 2008. The increase was due to the higher production costs, principally coal and electrical power, for our cement products, along with higher production levels. Cost of sales as a percentage of total sales was 87.8% for the 2009 period compared with 83.4% for the comparable 2008 period. The difference represents an increase of 4.4% which is due to the higher production costs which were not offset by higher product prices.
Gross profit for the three month period ended March 31, 2009 decreased $534,592 or 27.64%, from $1,934,158 to $1,399,566 for the comparable period in 2008. The decrease is due to the reasons discussed above.
Selling and administrative expenses for the three month period ended March 31, 2009 increased $20,278, or 7.19%, from $281,907 to $302,185 for comparable period in 2008. This increase is due principally to higher salaries and benefits which were paid to management in 2009.
Operating income was $1,097,381 for the three month period ended March 31, 2009 compared with $1,652,251 for the three month period ended March 31, 2008, representing a 33.6% decrease. The decrease in operating income for the 2008 period is due to the decrease in gross profit and an increase in selling and administrative expenses, both of which are discussed above.
During the 2009 period, we had no subsidy income compared to the $167,465 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 March 31, 2009 was $51,616 compared to $553,348 for the three month period ended March 31, 2008. The decrease of $501,732, or 90.7%, is due to the forgiveness of a $13,395,095 loan by our major lending back which occurred during the fiscal 2008 year as a result of the relocation of our Zhaoyuan plant.
Income before income taxes was $1,058,811 for the three month period ended March 31, 2009, compared to income before income taxes of $1,266,292 for the three month period ended March 31, 2008. The decrease of $207,481 was due to the reasons discussed above.
Net income was $816,881 for the three month period ended March 31, 2009, compared to $879,107 for the three month period ended March 31, 2008, a decrease of $62,226, or 7.08%.
Financial Condition
As of March 31, 2009, China Shuangji Cement had $516,639 in total cash, approximately $15.79 million in working capital, and $1.23 million in bank loans. Shareholder's equity at the end of the March 31, 2009 stood at $31.84 million, compared to $30.91 million recorded at the end of 2008.
Business Outlook
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 July 2009. In addition, on April 15, 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 7.14% decrease in tonnage production during the first three months of 2009 from the prior period.
We foresee positive business sales in the fiscal second 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 upgraded (200,000 tonnes).
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.