China Shengda Packaging Group Reports First Quarter 2013 Results PR Newswire HANGZHOU, China, May 13, 2013 HANGZHOU, China, May 13, 2013 /PRNewswire/ -- China Shengda Packaging Group Inc. (NASDAQ: CPGI) (the "Company"), a leading Chinese paper packaging manufacturer, today announced its financial results for the three months ended March 31, 2013. Mr. Daliang Teng, Chief Executive Officer of China Shengda Packaging Group commented, "Our revenues for the three months ended March 31, 2013 declined slightly to $27.1 million from $28.5 million for the same period of last year mainly due to the decline in overall sales volume, reflecting continued challenges in macro environment faced by our customers. However, we are pleased to see our gross margin continue to improve, increasing approximately 34 basis points from the same period of last year and 18 basis points sequentially. We are also excited to announce that the construction of our paper mill is finally near its completion and we expect production to commence by the end of the second quarter of 2013." First Quarter 2013 Financial Highlights: oRevenues decreased by 4.8% to $27.1million for the first quarter of 2013, mainly due decrease in sales volume. oGross profit decreased by 3.1% to $5.3million for the first quarter of 2013 from $5.5 million for the same period of 2012. Gross margin increased by 34 basis points to 19.5% for the first quarter of 2013. oNet income attributable to the Company's common stockholders decreased by $0.6million, or 43.3%, to $0.9 million for the first quarter of 2013 from $1.5 million for the same period of 2012. oBasic and diluted earnings per share were $0.02 for the first quarter of 2013, as compared to $0.04 for the same period of last year. Sales Analysis First Quarter Ended First Quarter Ended March 31, 2013 March 31, 2012 Sales Volume (M sq meters) 69.2 72.6 Color Cartons (% of total revenues) 28.3 27.2 Flexo Cartons (% of total revenues) 71.7 72.8 Color Cartons (avg price per sq meter) 0.40 0.44 Flexo Cartons (avg price per sq meter) 0.39 0.38 FirstQuarterEnded First Quarter Ended Summary Results (Millions) March 31, 2013 March 31, 2012 Revenues $27.1 $28.5 Gross Profit $5.3 $5.5 Gross Margin (%) 19.5% 19.2% Operating Expenses $4.0 $3.6 Operating Income $1.3 $1.9 Operating Margin (%) 4.8% 6.6% Net Income attributable to the $0.9 $1.5 Company's common stockholders EPS Basic & Diluted $0.02 $0.04 Wtd Avg Shares Outstanding (millions) 38.8 38.8 First Quarter 2013 Results Revenues for the first quarter of 2013 was $27.1 million, an decrease of $1.4 million or 4.8%, from $28.5 million for the same period of 2012. The decrease was mainly due to decline in sales volume. The average sales price was $0.39 per square meter for the first quarter of 2013, essentially unchanged from the same period of last year. Sales volume decreased by 3.4 million square meters, or 4.6%, to 69.2 million square meters for the first quarter of 2013 from 72.6 million square meters for the same period of 2012. The decrease in sales volume was mainly the result of continued challenges in domestic and foreign economic environment. Color cartons accounted for 28.3% of revenues and flexo cartons accounted for 71.7% of revenues for the first quarter of 2013, compared to 27.2% and 72.8%, respectively, for the same period of 2012. Average sales prices per square meter for color cartons and flexo cartons were $0.40 and $0.39, respectively, for the first quarter of 2013, as compared to $0.44 and $0.38, respectively, for the same period of 2012. Consumer and industrial goods manufacturing sectors remained the Company's principal markets. Major customers remained home appliances & electronics manufacturers and food, beverage & cigarette manufacturers in the Yangtze River Delta Region, which accounted for 28.3% and 29.8%, respectively, of revenues for the first quarter of 2013, as compared to 29.4% and 29.6%, respectively, for the same period of 2012. Gross profit decreased by $0.2 million, or 3.1%, to $5.3 million for the first quarter of 2013, from $5.5 million for the same period of 2012. The decrease in gross profit was mainly due to decline in sales volume. Gross margin increased by approximately 34 basis points to 19.5% for the first quarter of 2013 from 19.2% for the same period of 2012. Selling expenses decreased by $0.1 million, or 7.9%, to $1.2 million for the first quarter of 2013, from $1.3 million for the same period of 2012. The decrease was mainly related to decrease in freight expenses. As a percentage of revenues, selling expenses for the first quarter of 2013 decreased to 4.3% from 4.4% for the same period of 2012. General and administrative expenses increased by $ 0.5 million, or 22.2%, to $2.8 million for the first quarter of 2013, from $2.3 million for the same period of 2012. This was mainly attributable to a $0.2 million increase in R&D expenses, and a 0.2 million increase in staff costs. As a percentage of revenues, general and administrative expenses for the first quarter of 2013 increased to 10.4% from 8.1% for the same period of 2012. Income tax expense increased to $0.32 million for the first quarter of 2013, as compared to $0.31 million for the same period of 2012. The increase in income tax expense was mainly attributable to the increase in income tax rate of Zhejiang Great Shengda Packaging Co., Ltd. ("Great Shengda") from 15% to 25%, and offset by the decrease in income before income tax expense and noncontrolling interest. Great Shengda is a consolidated subsidiary of the Company. In December 2010, Great Shengda qualified as a National High-Tech Enterprise in the PRC, a status recognized by China's Ministry of Science and Technology, Ministry of Finance, and State Administration of Taxation. In December 2010, the status was approved by the local tax bureau who granted Great Shengda a preferential tax rate of 15%, retroactively effective as of January 1, 2010. Such status is subject to review by government authorities every three years. During the review period, as Great Shengda currently is, the income tax is subject to the uniform income tax rate of 25% starting in 2013. Upon passing the review, the preferential tax rate of 15% will be applied retroactively from January 1, 2013. We cannot assure you that we will continue to have such status after 2013 or that the PRC government will continue the preferential tax treatment of designated high-tech enterprises. Net income attributable to the Company's common stockholders decreased by $0.6 million, or 43.3%, to $0.9 million for the first quarter of 2013 from $1.5 million for the same period of 2012. Basic and diluted earnings per share were $0.02 for the first quarter of 2013, as compared to $0.04 for the same period of 2012. Financial Condition As of March 31, 2013, the Company had cash and cash equivalents of $10.0 million and restricted cash of $26.3 million. Shareholders' equity was $106.5 million, compared to $105.0 million at December 31, 2012. Net cash used in operating activities was $2.5 million for the first quarter of 2013, as compared to $1.6 million net cash provided by operating activities for the same period of 2012. This was attributable to net income of $0.9 million, adjusted by depreciation and amortization expenses of $1.1 million, and a net decrease in cash from restricted cash of $3.6 million, and a net decrease in cash from other working capital items of $0.9 million. Net cash used in investing activities was $2.7 million for the first quarter of 2013, which was essentially unchanged from the same period of 2012. The $2.7 million was used for purchases of property, plant and equipment, primarily related to machinery purchases and plant construction of our paper mill. The construction of the paper mill is approaching its completion and we expect production to start by the end of second quarter of 2013. Net cash provided by financing activities was $3.2 million for the first quarter of 2013, reflecting the proceeds of short term loans received by the company. About China Shengda Packaging Group Inc. China Shengda Packaging Group Inc. is a leading paper packaging company in China. It is principally engaged in the design, manufacturing and sale of flexo-printed and color-printed corrugated paper cartons in a variety of sizes and strengths. It also manufactures corrugated paperboards, which are used for the production of its flexo-printed and color-printed cartons. The company provides paper packaging solutions to a wide variety of industries, including food, beverage, cigarette, household appliance, consumer electronics, pharmaceuticals, chemicals, machinery and other consumer and industrial sectors in China. Safe Harbor Statements This press release may contain forward-looking statements. Any statements set forth above that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors include, but are not limited to, the Company's ability to develop and market new products, the ability to commence production of the new paper mill, the ability to access capital for expansion and continued investment in R&D, the ability to acquire other companies, changes from anticipated levels of sales, changes in national or regional economic and competitive conditions, changes in relationships with customers, changes in profit margins of principal product and other factors discussed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Company Contact: China Shengda Packaging Group Inc. Cindy Hu, Board Secretary Tel: Tel: +86-571 8283 8770 E-mail: firstname.lastname@example.org Website: http://www.cnpti.com Investor Relations Contact: Weitian Group LLC Tina Xiao Tel: +1-917-609-0333 Email: email@example.com Website: http://www.weitian-ir.com CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Amounts in US$) Three Months Ended March 31, 2013 2012 (Unaudited) (Unaudited) Revenues 27,091,970 28,463,796 Cost of goods sold 21,809,729 23,012,197 Gross profit 5,282,241 5,451,599 Operating expenses Selling expenses 1,161,787 1,260,791 General and administrative expenses 2,820,091 2,308,648 3,981,878 3,569,439 Other income (expenses) Interest income 86,424 77,338 Interest expense (127,702) (202,258) Subsidy income 96,704 61,770 Others - 34,415 55,426 (28,735) Non-operating income (expenses) Non-operating expense (166,088) - (166,088) - Income before income tax expense and 1,189,701 1,853,425 noncontrolling interest Income tax expense 322,152 313,999 Net income 867,549 1,539,426 Net loss attributable to noncontrolling interest 5,863 1,339 Net income attributable to Company's common stockholders 873,412 1,540,765 Basic and diluted earnings per share 0.02 0.04 Weighted-average number of shares outstanding - basic and diluted 38,790,811 38,790,811 Comprehensive income: Net income 867,549 1,539,426 Foreign currency translation adjustment 585,947 662,352 Comprehensive income 1,453,496 2,201,778 Comprehensive loss attributable to noncontrolling interest 5,873 1,360 Net comprehensive income attributable to the Company's common stockholders 1,459,369 2,203,138 CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in US$) March 31, December31, ASSETS 2013 2012 Current assets (Unaudited) Cash and cash equivalents 9,957,027 11,903,937 Restricted cash 26,330,067 22,615,099 Accounts and notes receivable, net 35,237,190 33,203,457 Inventories 16,204,976 15,543,213 Prepayments and other receivables 2,716,841 955,953 Amount due from related parties 189,786 207,112 Total current assets 90,635,887 84,428,771 Non-current assets Property, plant and equipment, net 72,335,055 70,184,832 Land use right 11,881,643 11,881,160 Customer relationships, net 46,986 74,766 Deferred tax assets 454,035 403,121 Goodwill 176,910 175,941 Total assets 175,530,516 167,148,591 LIABILITIES AND EQUITY Current liabilities Accounts and notes payable 48,027,534 45,246,615 Amounts due to related party 613,695 269,505 Accruedexpensesandotherpayables 2,798,823 2,310,270 Taxes payable 1,490,575 1,360,386 Short-term loans 6,691,523 3,500,000 Current portion of long-term borrowing 9,000,000 4,500,000 Total current liabilities 68,622,150 57,186,776 Non-current liabilities Long-term loans - 4,500,000 Deferred tax liabilities 11,746 18,691 Total liabilities 68,633,896 61,705,467 Commitment and contingencies Equity Stockholders' equity Common stock (US$0.001 par value, 190,000,000 shares authorized, 39,456,311 shares issued both at March 31, 2013 39,456 39,456 and December 31, 2012, 38,790,811 outstanding both at March 31,2013 and December 31, 2012) Treasury stock (665,500 shares both at March 31,2013 and December 31, 2012) (729,444) (729,444) Additional paid-in capital 43,765,243 43,765,243 Appropriatedretainedearnings 6,997,530 6,997,530 Unappropriated retained earnings 46,732,736 45,859,324 Accumulated other comprehensive income 9,687,596 9,101,639 Total equity for stockholders of China Shengda Packaging 106,493,117 105,033,748 Noncontrolling interest 403,503 409,376 Total equity 106,896,620 105,443,124 Total liabilities and equity 175,530,516 167,148,591 CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in US$) Three Months Ended March 31, 2013 2012 (Unaudited) (Unaudited) Cash flows from operating activities Netincome 867,549 1,539,426 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expenses 1,129,224 1,114,954 Change in operating assets and liabilities: Restricted cash (3,584,572) (4,922,510) Accounts and notes receivable (1,843,888) 4,542,386 Inventories (575,246) (486,621) Prepayments and other receivables (1,752,744) (2,224,212) Accounts and notes payable 2,381,624 3,250,690 Amount due from(to) related party 360,581 38,299 Deferred tax (55,651) (13,547) Accrued expenses and other payables 406,348 542,559 Tax payables 122,498 (1,826,284) Net cash (used in) provided by operating activities (2,544,277) 1,555,140 Cash flows from investing activities Purchase of property, plant and equipment (2,651,151) (276,597) Prepayment paid for construction in progress - (2,464,972) Net cash used in investing activities (2,651,151) (2,741,569) Cash flows from financing activities Proceeds from short-term loan 3,191,523 - Proceeds from long-term loan - 7,692,176 Repayment of short-term loans - (6,215,272) Net cash flows provided by financing activities 3,191,523 1,476,904 Effect of foreign currency exchange rate fluctuation on cash and cash equivalents 56,995 124,785 Net changes in cash and cash equivalents (1,946,910) 415,260 Cash and cash equivalents, beginning of period 11,903,937 19,294,089 Cash and cash equivalents, end of period 9,957,027 19,709,349 Cash paid during the period for: Interest paid 127,274 191,157 Income taxes paid 356,442 96,273 SOURCE China Shengda Packaging Group Inc.
China Shengda Packaging Group Reports First Quarter 2013 Results