China Shengda Packaging Group Reports Second Quarter 2013 Results

      China Shengda Packaging Group Reports Second Quarter 2013 Results

PR Newswire

HANGZHOU, China, Aug. 14, 2013

HANGZHOU, China, Aug. 14, 2013 /PRNewswire-FirstCall/ -- China Shengda
Packaging Group Inc. (NASDAQ: CPGI) (the "Company"), a leading Chinese paper
packaging company, today reported its second quarter financial results for the
three months ended June 30, 2013.

Mr. Daliang Teng, Chief Executive Officer of China Shengda Packaging Group
commented, "Our revenues for the three months ended June 30, 2013 declined to
$33.5 million from $36.7 million for the same period of last year, mainly due
to the decline in paper cartons sales volume and partially offset by $0.7
million in revenues from the newly completed paper mill which went into
production on June 17, 2013. The decline in paper cartons sales volume was
mainly a result of continued challenges in light of China's slowing GDP growth
trend. Looking ahead, we expect our continued ramp-up of the paper mill to
contribute meaningfully to our revenues and to partially offset the weakness
in our packaging business."

Second Quarter 2013 Financial Highlights:

  oRevenues decreased by 8.6% year-over-year to $33.5million for the second
    quarter of 2013 with revenues for paper cartons and other paper products
    decreasing 10.4% to $32.8 million and revenues for raw paper contributing
    $0.7 million. The decline in revenues from paper cartons and other paper
    products are mainly due to lower sales volume.
  oGross profit decreased by 17.5% to $4.8million for the second quarter of
    2013 from $5.9 million for the same period of 2012. Gross margin decreased
    by 155 basis points to 14.4% for the second quarter of 2013.
  oNet income attributable to the Company's stockholders decreased by
    $0.9million, or 54.2%, to $0.8 million for the second quarter of 2013
    from $1.7 million for the same period of last year.
  oBasic and diluted earnings per share were $0.02 for the second quarter of
    2013, as compared to $0.04 for the same period of last year.

                                            Three Months    Three Months
Sales Analysis (Millions)                   Ended           Ended
                                            June 30, 2013   June 30, 2012
Revenues - Paper Cartons (millions)         $32.8           $36.7
Revenues - Raw Paper (millions)             $0.7             NA
Color Cartons (% of paper cartons revenues) 29.1%           30.3%
Flexo Cartons (% of paper cartons revenues) 70.9%           69.7%
                                                          

Paper Cartons Sales Volume (M sq meters)    82.9            91.9
Raw paper Sales Volume ('000 tons)          1.9             NA
                                                          

Color Cartons (avg price per sq meter)      $0.39           $0.41
Flexo Cartons (avg price per sq meter)      $0.40           $0.39
Raw Paper (avg price per ton)               $356             NA
                                            
                                                            Second Quarter
Summary Results (Millions)                  Second Quarter Ended
                                            Ended           June 30, 2012
                                            June 30, 2013
Revenues                                    $33.5           $36.7
Gross Profit                                $4.8            $5.9
Gross Margin (%)                            14.4%           16.0%
Operating Expenses                          $4.0            $3.9
Operating Income                            $0.8            $1.9
Operating Margin (%)                        2.4%            5.3%
Net Income attributable to the Company's
                                            $0.8            $1.7
stockholders
EPS Basic & Diluted                         $0.02           $0.04
Wtd Avg Shares Outstanding (millions)       38.8            38.8

Second Quarter 2013 Results

Total revenues for the second quarter of 2013 decreased by $3.2 million, or
8.6%, to $33.5 million from $36.7 million for the same period of 2012.
Revenues of paper cartons and other paper products decreased by $3.9 million,
or 10.4%, to $32.8 million for the second quarter of 2013 from $36.7 million
for the same period of last year. Our paper mill went into production in June
2013 and contributed $0.7 million, or 2.0% of total revenues, with sales
volume of 1,900 tons. The decrease in revenues of paper cartons was mainly
because continued challenges in domestic and foreign economic environment
drove sales volume of paper cartons to decrease by 9.9% to 82.9 million square
meters for the second quarter of 2013 from 91.9 million square meters for the
same period of last year. The average sales price of paper cartons was $0.40
per square meter for the second quarter of 2013, essentially unchanged from
the same period of last year. Average sales price of raw paper was $356 per
ton for the second quarter of 2013.

Color cartons and flexo cartons accounted for 29.1% and 70.9% of revenues of
paper cartons for the second quarter of 2013, compared to 30.3% and 69.7%,
respectively, for the same period of 2012. Average sales prices per square
meter for color cartons and flexo cartons were $0.39 and $0.40, respectively,
for the second quarter of 2013, as compared to $0.41 and $0.39, 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 25.0% and 24.7%, respectively, of
revenues for the second quarter of 2013, as compared to 25.7% and 32.1%,
respectively, for the same period of 2012.

Gross profit decreased by $1.1 million, or 17.5%, to $4.8 million for the
second quarter of 2013, from $5.9 million for the same period of 2012. The
decrease in gross profit was mainly due to decline in paper cartons sales
volume and negative gross profit of ($0.7) million for raw paper. Gross margin
decreased by 155 basis points to 14.4% for the second quarter of 2013 from
16.0% for the same period of 2012.

Selling expenses decreased by approximately $0.2 million, or 19.1%, to $1.1
million for the second quarter of 2013, from $1.3 million for the same period
of 2012. The decrease was mainly related to decrease in freight expenses and
staff cost. As a percentage of revenues, selling expenses for the second
quarter of 2013 decreased to 3.2% from 3.6% for the same period of 2012.

General and administrative expenses increased by $ 0.4 million, or 14.6%, to
$3.0 million for the second quarter of 2013, from $2.6 million for the same
period of 2012. This increase was mainly from the operation of the paper mill
of Jiangsu Shuangsheng Paper Technology Development Co., Ltd. ("Shuangsheng")
in 2013. As a percentage of revenues, general and administrative expenses for
the second quarter of 2013 increased to 8.9% from 7.1% for the same period of
2012.

Income tax expense decreased to $0.2 million for the second quarter of 2013,
as compared to $0.4 million for the same period of 2012. The decrease in
income tax expense was mainly attributable to the decrease in income before
income tax expense and non controlling interest.

Net income attributable to the Company's stockholders decreased by $0.9
million, or 54.2%, to approximately $0.8 million for the second quarter of
2013 from $1.7 million for the same period of 2012. Basic and diluted earnings
per share were $0.02 for the second quarter of 2013, as compared to $0.04 for
the same period of 2012.

Six Months Ended June 30, 2013 Results
                                            Six Months   Six Months
Sales Analysis (Millions)                                 Ended
                                            Ended
                                            June 30, 2013 June 30, 2012
Revenues - Paper Cartons (millions)         $59.9         $65.1
Revenues - Raw Paper (millions)             $0.7          NA
Color Cartons (% of paper cartons revenues) 28.7%         28.9%
Flexo Cartons (% of paper cartons revenues) 71.3%         71.1%
                                                        

Paper Cartons Sales Volume (M sq meters)    152.1         164.5
Raw paper Sales Volume ('000 tons)          1.9           NA

                                            $0.40         $0.42
Color Cartons (avg price per sq meter)
Flexo Cartons (avg price per sq meter)      $0.39         $0.39
Raw Paper (avg price per ton)               $356          NA

                                                          Six Months
                                           Six Months    Ended
                                            Ended
                                           June 30, 2013 June 30, 2012

Summary Results (Millions)
Revenues                                    $60.6         $65.1
Gross Profit                                $10.1         $11.3
Gross Margin (%)                            16.7%         17.4%
Operating Expenses                          $8.0          $7.5
Operating Income                            $2.1          $3.8
Operating Margin (%)                        3.4%          5.9%
Net Income attributable to stockholders     $1.6          $3.2
EPS Basic & Diluted                         $0.04         $0.08
Wtd Avg Shares Outstanding (millions)       38.8          38.8

Total revenues for the six months ended June 30, 2013 decreased by $4.5
million, or 7.0%, to $60.6 million from $65.1 million for the same period of
2012. Revenues of paper cartons and other paper products decreased by $5.2
million, or 8.0%, to $59.9 million for the six months ended June 30, 2013 from
$65.1 million for the same period of last year. Our paper mill went into
production in June 2013 and contributed $0.7 million, or 1.1% of total
revenues for the six months ended June 30, 2013. The decrease in revenues of
paper cartons was mainly because continued challenges in domestic and foreign
economic environment drove sales volume of paper cartons to decrease by 7.5%
to 152.1 million square meters for the six months ended June 30, 2013 from
164.5 million square meters for the same period of last year. The average
sales price of paper cartons was $0.39 per square meter for the six months
ended June 30, 2013, which was approximately the same as in the same period of
2012. Average sales price of raw paper was $356 per ton for the six months
ended June 30, 2013.

Color cartons and flexo cartons accounted for 28.7% and 71.3% of revenues of
paper cartons, respectively, for the six months ended June 30, 2013, as
compared to 28.9% and 71.1%, 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 six months ended June 30, 2013, as
compared to $0.42 and $0.39, 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 26.5% and 27.0%, respectively, of
revenues for the six months ended June 30, 2013, as compared to 27.3% and
31.0% respectively, for the same period of 2012.

Gross profit decreased by $1.2 million, or 10.6%, to $10.1 million for the six
months ended June 30, 2013, from $11.3 million for the same period of 2012.
The decrease in gross profit was mainly due to decline in paper cartons sales
volume and negative gross profit of ($0.7) million for raw paper. Gross margin
dropped by 67 basis points to 16.7% for the six months ended June 30, 2013
from 17.4% for the same period of 2012.

Selling expenses decreased by approximately $0.4 million, or 13.6%, to $2.2
million for the six months ended June 30, 2013, from $2.6 million for the same
period of 2012. The decrease was mainly related to decrease in freight
expenses and staff cost. As a percentage of revenues, selling expenses for the
six months ended June 30, 2013 decreased to 3.7% from 4.0% for the same period
of 2012.

General and administrative expenses increased by $ 0.9 million, or 18.1%, to
$5.8 million for the six months ended June 30, 2013, from $4.9 million for the
same period of 2012. This increase was mainly from the operation of
Shuangsheng in 2013. As a percentage of revenues, general and administrative
expenses for the six months ended June 30, 2013 increased to 9.6% from 7.5%
for the same period of 2012.

Income tax expense decreased to $0.5 million for the six months ended June 30,
2013 from $0.7 million for the same period of 2012. The decrease in income tax
expense was mainly attributable to the decrease in income before income tax
expense and non controlling interest.

Net income attributable to the Company's common stockholders decreased by $1.6
million, or 49.0%, to $1.6 million for the six months ended June 30, 2013,
from $3.2 million for the same period of 2012. Basic and diluted earnings per
share were $0.04 for the six months ended June 30, 2013, as compared to $0.08
for the same period of 2012.

Financial Condition

As of June 30, 2013, the Company had cash and cash equivalents of $7.3 million
and restricted cash of $19.3 million. Shareholders' equity was $108.7 million,
compared to $105.0 million at December 31, 2012. Net cash used in operating
activities was $4.8 million for the six months ended June 30, 2013, as
compared to $8.6 million net cash provided by operating activities for the
same period of 2012. This was attributable to net income of $1.6 million,
adjusted by depreciation and amortization expenses of $2.5 million, and a net
decrease in cash from working capital items of $8.9 million. Net cash used in
investing activities was $3.3 million for the six months ended June 30, 2013,
as compared to $11.7 million for the same period of 2012. The $3.3 million was
used for purchases of property, plant and equipment and prepayment for
construction, primarily related to machinery purchases and plant construction
of our paper mill which was completed in June 2013. Net cash provided by
financing activities was $3.2 million for the six months ended June 30, 2013,
as compared to $2.0 million net cash used in financing activities for the same
period of 2012. During the second quarter of 2013, we received loan proceeds
amounting to $3.2 million.

Recent Development

On June 17, 2013, Shuangsheng completed the construction of the paper mill and
officially commenced the production of raw paper. The paper mill is located in
Sheyang County, Jiangsu Province with an annual raw paper production capacity
of 150,000 tons.

About China Shengda Packaging Group Inc.

China Shengda Packaging Group Inc. is a leading paper packaging company in
China. It is principally engaged in design, manufacturing and sale of
flexo-printed and color-printed corrugated paper cartons in a variety of sizes
and strengths. It also manufactures raw paper and corrugated paperboards,
which are used for the production of 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 reach full production capacity 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: +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 BALANCE SHEETS
(Amounts in US$)
                                                  June 30,       December 31,
ASSETS                                             2013           2012
Current assets                                     (Unaudited)
Cash and cash equivalents                          $7,266,116     $11,903,937
Restricted cash                                    19,287,330     22,615,099
Accounts and notes receivable, net                 32,771,597     33,203,457
Inventories                                        20,841,422     15,543,213
Prepayments and other receivables                  2,618,930      955,953
Deductible value added tax payable                 3,018,636      -
Amount due from related parties                    229,397        207,112
Total current assets                               86,033,428     84,428,771
Non-current assets
Property, plant and equipment, net                 68,658,053     70,184,832
Land use right                                     11,980,946     11,881,160
Customer relationships, net                        19,056         74,766
Deferred tax assets                                700,416        403,121
Goodwill                                           179,368        175,941
Total assets                                       $167,571,267   $167,148,591
LIABILITIES AND EQUITY
Current liabilities
Accounts and notes payable                         $36,828,587    $45,246,615
Amounts due to related party                       532,850        269,505
Accrued expenses and other payables                4,289,846      2,310,270
Taxes payable                                      1,049,973      1,360,386
Short-term loans                                   6,735,879      3,500,000
Current portion of long-term borrowing             9,000,000      4,500,000
Total current liabilities                          58,437,135     57,186,776
Non-current liabilities
Long-term loans                                    -              4,500,000
Deferred tax liabilities                           4,764          18,691
 Total liabilities                              58,441,899     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
June 30,                                           39,456         39,456
 2013 and December 31, 2012, 38,790,811
outstanding
 both at June 30,2013 and December 31, 2012)
Treasury stock (665,500 shares both at June
30,2013 and                                        (729,444)      (729,444)
 December 31, 2012)
Additional paid-in capital                         43,765,243     43,765,243
Appropriated retained earnings                     6,997,530      6,997,530
Unappropriated retained earnings                   47, 489,777    45,859,324
Accumulated other comprehensive income             11,186,501     9,101,639
Total equity for stockholders of China Shengda    108,749,063    105,033,748
Packaging
Noncontrolling interest                            380,305        409,376
 Total equity                                   109,129,368    105,443,124
Total liabilities and equity                       $167,571,267   $167,148,591



CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Amounts in US$)
                        Three months ended June 30,  Six months ended June 30,
                        2013           2012          2013          2012
                        (Unaudited)    (Unaudited)   (Unaudited)   (Unaudited)
Revenues                $33,488,279    $36,654,052   $60,580,249   $65,117,848
Cost of goods sold      28,654,719     30,795,625    50,464,448    53,807,822
Gross profit            4,833,560      5,858,427     10,115,801    11,310,026
Operating expenses
Selling expenses        1,068,130      1,320,933     2,229,917     2,581,724
General and
administrative          2,976,096      2,597,650     5,796,187     4,906,298
expenses
                        4,044,226      3,918,583     8,026,104     7,488,022
Other income
(expenses)
Interest income         118,124        102,858       204,548       180,196
Interest expense        (186,519)      (169,805)     (314,221)     (372,063)
Subsidy income          226,870        155,635       323,574       217,405
Other                   37,938         (10,395)      37,938        24,020
                        196,413        78,293        251,839       49,558
Non-operating expense
Non-operating expense   (30,717)       -             (196,805)     -
                        (30,717)       -             (196,805)     -
Income before income
tax expense and         955,030        2,018,137     2,144,731     3,871,562
 noncontrolling
interest
Income tax expense      220,904        365,517       543,056       679,516
Net income              734,126        1,652,620     1,601,675     3,192,046
Less: net loss
attributable to         22,915         1,853         28,778        3,192
noncontrolling
 interest
Net income
attributable to
company's               $757,041       $1,654,473    $1,630,453    $3,195,238
 common
stockholders
Basic and diluted       $0.02          $0.04         $0.04         $0.08
earnings per share
Weighted-average
number of shares        38,790,811     38,790,811    38,790,811    38,790,811
 outstanding -
basic and diluted
Comprehensive income:
Net income              734,126        1,652,620     1,601,675     3,192,046
Foreign currency        1,498,622      50,964        2,084,569     713,337
translation adjustment
Comprehensive income    2,232,748      1,703,584     3,686,244     3,905,383
Less: comprehensive
loss attributable to    23,198         3,374         29,071        3,395
 noncontrolling
interest
                        $2,255,946     $1,706,958    $3,715,315    $3,908,778



CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in US$)
                                                    Six Months Ended June 30,
                                                    2013          2012
                                                    (Unaudited)   (Unaudited)
Cash flows from operating activities
Net income                                          $1,601,675    $3,192,046
Adjustments to reconcile net income to net
 cash provided by operating activities:
 Depreciation and amortization expenses          2,464,701     2,221,491
 Deferred tax                                    (300,669)     (27,073)
 Loss from disposal of property, plant and       20,559        -
equipment
Change in operating assets and liabilities:
 Restricted cash                                 3,730,288     (10,597,046)
 Accounts and notes receivable                   1,081,846     (2,000,508)
 Inventories                                     (4,945,023)   1,938,675
 Prepayments and other receivables               (1,627,764)   (712,774)
 Accounts and notes payable                      (8,074,364)   13,405,447
 Amount due from(to) related party               237,425       260,826
 Accrued expenses and other payables             1,674,009     1,323,720
 Tax payables                                    (613,973)     (451,999)
 Net cash (used in) provided by operating        (4,751,290)   8,552,805
activities
Cash flows from investing activities
 Purchase of property, plant and equipment       (3,285,327)   (10,417,503)
 Prepayment paid for construction in progress    -             (1,252,821)
 Proceeds from disposal of property, plant and   12,814        -
equipment
 Net cash used in investing activities           (3,272,513)   (11,670,324)
Cash flows from financing activities
 Proceeds from short-term loan                   3,235,879     6,668,579
 Proceeds from long-term loan                    -             4,485,578
 Repayment of short-term loans                   -             (13,319,514)
 Investment from noncontrolling interests        -             209,228
 Net cash flows provided by (used in) financing  3,235,879     (1,956,129)
activities
 Effect of foreign currency exchange rate
fluctuation on                                      150,103       140,795
 cash and cash equivalents
 Net changes in cash and cash equivalents        (4,637,821)   (4,932,853)
Cash and cash equivalents, beginning of period      11,903,937    19,294,089
Cash and cash equivalents, end of period            $7,266,116    $14,361,236
Cash paid during the period for:
Interest paid                                       $314,221      $329,692
Income taxes paid                                   $648,626      $535,413

SOURCE China Shengda Packaging Group Inc.

Website: http://www.cnpti.com
 
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