China Shengda Packaging Group Reports First Quarter 2013 Results

       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: cindy.hu@cnpti.com

Website: http://www.cnpti.com 

Investor Relations Contact:

Weitian Group LLC
Tina Xiao
Tel: +1-917-609-0333
Email: tina.xiao@weitian-ir.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.