China Shengda Packaging Group Reports Third Quarter 2013 Results

       China Shengda Packaging Group Reports Third Quarter 2013 Results

PR Newswire

HANGZHOU, China, Nov. 13, 2013

HANGZHOU, China, Nov. 13, 2013 /PRNewswire-FirstCall/ -- China Shengda
Packaging Group Inc. (NASDAQ: CPGI) ("Shengda" or the "Company"), a leading
Chinese paper packaging company, today reported its financial results for the
third quarter ended September 30, 2013.

Mr. Daliang Teng, Chief Executive Officer of China Shengda Packaging Group
commented, "Despite continued challenges in economic environment, we continued
to grow our paper cartons business in the third quarter which grew 3.1% to the
highest level since 2Q12. We are also pleased to see our paper mill starting
to contribute meaningfully to our business, generating $5.9 million, or
approximately 15% of total revenues, in the third quarter. With the continuing
ramp of the paper mill and our heightened efforts in sales and marketing for
our paper carton business, we believe Shengda is well positioned in years to
come."

Third Quarter 2013 Financial Highlights:

  oRevenues increased by 20.9% year-over-year to $39.9.million for the third
    quarter of 2013 with revenues for paper cartons and other paper products
    increasing 3.1% to $34.1 million and revenues for raw paper contributing
    $5.9 million.
  oGross profit decreased by 10.8% to $5.4million for the third quarter of
    2013 from $6.0 million for the same period of 2012. Gross margin of 13.4%
    for the third quarter of 2013 compared to 18.2% for the same period of
    last year.
  oNet income attributable to the Company's stockholders decreased by
    $0.9million, or 60.7%, to $0.5 million for the third quarter of 2013 from
    $1.4 million for the same period of last year.
  oBasic and diluted earnings per share were $0.01 for the third quarter of
    2013, as compared to $0.04 for the same period of last year.

                                            Three Months  Three Months
Sales Analysis (Millions)                   Ended       Ended
                                            September 30, September 30,
                                            2013          2012
Revenues– Paper Cartons (millions)          $34.1         $33.0
Revenues– Raw Paper (millions)              $5.9          NA
Color Cartons (% of paper cartons revenues) 29.5%         31.3%
Flexo Cartons (% of paper cartons revenues) 70.5%         68.7%
Paper Cartons Sales Volume (M sq meters)    85.1          84.4
Raw paper Sales Volume ('000 tons)          16.4          NA
Color Cartons (avg price per sq meter)     $0.41         $0.41
Flexo Cartons (avg price per sq meter)      $0.40         $0.38
Raw Paper (avg price per ton)               $357          NA
                                            
                                                         Three Months
                                            Three Months  Ended
Summary Results (Millions)                  Ended         September 30,
                                            September 30, 2012
                                            2013
Revenues                                    $39.9         $33.0
Gross Profit                                $5.4          $6.0
Gross Margin (%)                            13.4%         18.2%
Operating Expenses                          $4.7          $4.3
Operating Income                            $0.7          $1.7
Operating Margin (%)                        1.7%          5.1%
Net Income attributable to the Company's    $0.5          $1.4
stockholders
EPS Basic & Diluted                         $0.01         $0.04
Wtd Avg Shares Outstanding (millions)       38.8          38.8

Three Months Ended September 30, 2013 Results

Total revenues for the third quarter of 2013 increased by $6.9 million, or
20.9%, to $39.9 million from $33.0 million for the same period of 2012.
Revenues of paper cartons and other paper products increased by $1.1 million,
or 3.1%, to $34.1 million for the third quarter of 2013 from $33.0 million for
the same period of last year. Our paper mill, which went into production in
June 2013, contributed $5.9 million, or 14.7% of total revenues, with sales
volume of 16.4 thousand tons and average price of $357 per ton. The increase
in both sales volume and average price contributed to the increase in revenues
from paper cartons. The sales volume of paper cartons increased by 0.7 million
square meters to 85.1 million square meter for the third quarter of 2013 from
84.4 million square meters for the same period of 2012. Average sales price
increased 2.4% to approximately $0.40 per square meter for the third quarter
of 2013 from approximately $0.39 per square meter in the third quarter of
2012. The increase in sales volume of paper cartons was mainly because of
greater efforts by our sales team, despite challenging domestic and foreign
economic environment.

Color cartons and flexo cartons accounted for 29.5% and 70.5% of revenues of
paper cartons and other paper products for the third quarter of 2013, compared
to 31.3% and 68.7%, respectively, for the same period of 2012. Average sales
prices per square meter for color cartons and flexo cartons were $0.41 and
$0.40, respectively, for the third quarter of 2013, as compared to $0.41 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 22.5% and 24.6%, respectively, of
revenues of paper cartons and other paper products for the third quarter of
2013, as compared to 23.6% and 36.4%, respectively, for the same period of
2012.

Gross profit decreased by $0.6 million, or 10.8%, to $5.4 million for the
third quarter of 2013 from $6.0 million for the same period of 2012. Gross
margin decreased by approximately 4.8 points to 13.4% for the third quarter of
2013 from 18.2% for the same period of 2012.

Selling expenses increased by approximately $0.5 million, or 37.8%, to $1.9
million for the third quarter of 2013 from $1.4 million for the same period of
2012. The increase was mainly related to increase in freight expenses and
increase in marketing expenses related to the paper mill in 2013. As a
percentage of revenues, selling expenses for the third quarter of 2013
increased to 4.8% from 4.2% for the same period of 2012.

General and administrative expenses decreased by $ 0.1 million, or 5.3%, to
$2.8 million for the third quarter of 2013 from $2.9 million for the same
period of 2012. This decrease was mainly related to the decline in office
expenses. As a percentage of revenues, general and administrative expenses
for the third quarter of 2013 decreased to 7.0% from 8.9% for the same period
of 2012.

Income tax expense decreased to $0.2 million for the third quarter of 2013
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 60.7%, to approximately $0.5 million for the third quarter of 2013
from $1.4 million for the same period of 2012. Basic and diluted earnings per
share were $0.01 for the third quarter of 2013, as compared to $0.04 for the
same period of 2012.

Nine Months Ended September 30, 2013 Results
                                           Nine Months  Nine Months
                                            Ended         Ended
Sales Analysis (Millions)                   September 30, September 30,
                                            2013          2012
Revenues– Paper Cartons (millions)          $94.0         $98.2
Revenues– Raw Paper (millions)              $6.5          NA
Color Cartons (% of paper cartons revenues) 29.0%         29.7%
Flexo Cartons (% of paper cartons revenues) 71.0%         70.3%
Paper Cartons Sales Volume (M sq meters)    237.3         249.0
Raw paper Sales Volume ('000 tons)          18.3          NA
Color Cartons (avg price per sq meter)     $0.40         $0.42
Flexo Cartons (avg price per sq meter)      $0.39         $0.38
Raw Paper (avg price per ton)               $357          NA
                                                         

                                            Nine Months   Nine Months
Summary Results (Millions)                  Ended         Ended
                                            September 30, September 30,
                                            2013          2012
Revenues                                    $100.5        $98.2
Gross Profit                                $15.5         $17.3
Gross Margin (%)                            15.4%         17.6%
Operating Expenses                          $12.7         $11.8
Operating Income                            $2.8          $5.5
Operating Margin (%)                        2.8%          5.6%
Net Income attributable to stockholders     $2.2          $4.6
EPS Basic & Diluted                         $0.06         $0.12
Wtd Avg Shares Outstanding (millions)       38.8          38.8

Total revenues for the nine months ended September 30, 2013 increased by $2.3
million, or 2.4% to $100.5 million from $98.2 million for the same period of
2012. Revenues of paper cartons and other paper products decreased by $4.2
million, or 4.3%, to $94 million for the nine months ended September 30, 2013
from $98.2 million for the same period of last year. Our paper mill went into
production in June 2013 and contributed $6.5 million, or 6.5% of total
revenues with sales volume of 18.3 thousand tons and the average price of $357
per ton. The decrease in revenues of paper cartons was a result of continued
challenges in domestic and foreign economic environment that led to 4.7%
decline in sales volume of paper cartons to 237.3 million square meters for
the nine months ended September 30, 2013 from 249 million square meters for
the same period of last year.

Color cartons and flexo cartons accounted for 29.0% and 71.0% of revenues of
paper cartons and other paper products, respectively, for the nine months
ended September 30, 2013, as compared to 29.7% and 70.3%, 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 nine
months ended September 30, 2013, as compared to $0.42 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 24.9% and 26.0%, respectively, of
revenues of paper cartons and other paper products for the nine months ended
September 30, 2013, as compared to 26.1% and 32.8% respectively, for the same
period of 2012.

Gross profit decreased by $1.8 million, or 10.6%, to $15.5 million for the
nine months ended September 30, 2013 from $17.3 million for the same period of
2012. Gross margin dropped by approximately 2.2 points to 15.4% for the nine
months ended September 30, 2013 from 17.6% for the same period of 2012.

Selling expenses increased by $0.1 million, or 4.3%, to $4.1 million for the
nine months ended September 30, 2013 from $4.0 million for the same period of
2012. The increase was mainly due to increased marketing expenses at our paper
mill in 2013. As a percentage of revenues, selling expenses for the nine
months ended September 30, 2013 increased to 4.1% from 4.0% for the same
period of 2012.

General and administrative expenses increased by $ 0.8 million, or 9.4%, to
$8.6 million for the nine months ended September 30, 2013 from $7.8 million
for the same period of 2012. This increase was mainly due to the increase in
R&D expenses. As a percentage of revenues, general and administrative
expenses for the nine months ended September 30, 2013 increased to 8.5% from
8.0% for the same period of 2012.

Income tax expense decreased to $0.7 million for the nine months ended
September 30, 2013 from $1.0 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 $2.4
million, or 52.5%, to $2.2 million for the nine months ended September 30,
2013, from $4.6 million for the same period of 2012. Basic and diluted
earnings per share were $0.06 for the nine months ended September 30, 2013, as
compared to $0.12 for the same period of 2012.

Financial Condition

As of September 30, 2013, the Company had cash and cash equivalents of $6.2
million and restricted cash of $14.3 million. Shareholders' equity was $109.8
million, compared to $105.0 million at December 31, 2012. Net cash used in
operating activities was $8.8 million for the nine months ended September 30,
2013, as compared to net cash provided by operating activities of $22.0
million for the same period of 2012. This was attributable to net income of
$2.1 million, adjusted by depreciation and amortization expenses of $4.3
million, and a net decrease in cash from working capital items of $15.2
million. Net cash used in investing activities was $3.6 million for the nine
months ended September 30, 2013, as compared to $17.8 million for the same
period of 2012. The $3.6 million was used for purchases of property, plant and
equipment and prepayment for construction, primarily related to machinery
purchases and plant construction of Shuangsheng paper mill which was completed
in June 2013. Net cash provided by financing activities was $6.4 million for
the nine months ended September 30, 2013, as compared to $6.9 million net cash
used in financing activities for the same period of 2012. During the third
quarter of 2013, we received loan proceeds amounting to $6.4 million.

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$)
                                                  September 30,   December 31,
ASSETS                                           2013            2012
 Current assets                               (Unaudited)
 Cash and cash equivalents                    $6,168,747      $11,903,937
 Restricted cash                              14,261,516      22,615,099
 Accounts and notes receivable, net           39,718,512      33,203,457
 Inventories                                  21,063,833      15,543,213
 Prepayments and other receivables            2,368,740       955,953
 Deductible value added tax payable           3,731,189       -
 Amount due from related parties              203,241         207,112
 Total current assets                         87,515,778      84,428,771
 Non-current assets
 Property, plant and equipment, net           68,653,916      70,184,832
 Land use right                               11,974,476      11,881,160
 Customer relationships, net                  -               74,766
 Deferred tax assets                          1,059,542       403,121
 Goodwill                                     180,262         175,941
Total assets                                      $169,383,974    $167,148,591
LIABILITIES AND EQUITY
 Current liabilities
 Accounts and notes payable                   $32,170,878     $45,246,615
 Amounts due to related party                 1,113,761       269,505
 Accrued expenses and other payables          4,753,965       2,310,270
 Taxes payable                                2,168,336       1,360,386
 Short-term loans                             10,004,000      3,500,000
 Current portion of long-term borrowing       9,000,000       4,500,000
 Total current liabilities                    59,210,940      57,186,776
 Non-current liabilities
 Long-term loans                              -               4,500,000
 Deferred tax liabilities                     -               18,691
 Total liabilities                            59,210,940      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 September 30,
2013 and December 31,                             39,456          39,456
2012, 38,790,811 outstanding both at September
30,2013 and December
31, 2012)
Treasury stock (665,500 shares both at September  (729,444)       (729,444)
30,2013 and 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                  48,025,166      45,859,324
Accumulated other comprehensive income            11,728,293      9,101,639
Total equity for stockholders of China Shengda   109,826,244     105,033,748
Packaging
Noncontrolling interest                           346,790         409,376
 Total equity                                  110,173,034     105,443,124
Total liabilities and equity                      $169,383,974    $167,148,591

CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Amounts in US$)
                         Three months ended        Nine months ended September
                         September 30,             30,
                         2013         2012         2013            2012
                         (Unaudited)  (Unaudited)  (Unaudited)     (Unaudited)
Revenues                 $39,929,058  $33,033,566  $100,509,307    $98,151,414
Cost of goods sold       34,564,105   27,019,968   85,028,553      80,827,790
Gross profit             5,364,953    6,013,598    15,480,754      17,323,624
Operating expenses
 Selling expenses    1,901,019    1,379,774    4,130,936       3,961,498
 General and         2,784,893    2,940,979    8,581,080       7,847,277
administrative expenses
                         4,685,912    4,320,753    12,712,016      11,808,775
Other income (expenses)
 Interest income     151,792      118,520      356,340         298,716
 Interest expense    (248,127)    (115,577)    (562,348)       (487,640)
 Subsidy income      4,302        46,309       327,876         263,714
 Other               174,645      (16,878)     212,583         7,142
                         82,612       32,374       334,451         81,932
Non-operating expense
 Non-operating       98,120       -            294,925         -
expense
                         98,120       -            294,925         -
Income before income
tax expense and
noncontrolling           663,533      1,725,219    2,808,264       5,596,781

interest
Income tax expense       161,221      365,352      704,277         1,044,868
Net income               502,312      1,359,867    2,103,987       4,551,913
Net loss attributable
to noncontrolling        33,077       1,663        61,855          4,855
interest
Net income attributable
to company's common      $535,389     $1,361,530   $2,165,842      $4,556,768
stockholders
Basic and diluted        $0.01        $0.04        $0.06           $0.12
earnings per share
Weighted-average number
of shares outstanding -  38,790,811   38,790,811   38,790,811      38,790,811
basic and diluted
Comprehensive income:
Net income               502,312      1,359,867    2,103,987       4,551,913
 Foreign currency    541,354      -164,829     2,625,923       548,508
translation adjustment
Comprehensive income     1,043,666    1,195,038    4,729,910       5,100,421
Comprehensive loss
attributable to          33,515       1,800        62,586          5,195
noncontrolling interest
                         $1,077,181   $1,196,838   $4,792,496      $5,105,616





CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in US$)
                                              Nine Months Ended September 30,
                                              2013              2012
                                              (Unaudited)       (Unaudited)
Cash flows from operating activities
Net income                                    $2,103,987        $4,551,913
Adjustments to reconcile net income to net
cash provided by operating activities:
 Depreciation and amortization expenses    4,301,872         3,333,527
 Deferred tax                              (657,893)         (40,572)
 Loss from disposal of property, plant     90,614            -
and equipment
Change in operating assets and liabilities:
 Restricted cash                           8,804,882         (3,426,845)
 Accounts and notes receivable             (5,615,309)       1,345,391
 Inventories                               (5,078,848)       3,556,059
 Prepayments and other receivables         (1,379,429)       (436,701)
 Accounts and notes payable                (14,016,566)      12,824,684
 Amount due from(to) related party         836,702           544,609
 Accrued expenses and other payables       2,055,666         1,718,696
 Tax payables                              (205,277)         (2,002,434)
 Net cash (used in) provided by operating  (8,759,599)       21,968,327
activities
Cash flows from investing activities
 Purchase of property, plant and           (3,685,181)       (14,619,240)
equipment
 Prepayment paid for construction in       -                 (3,150,000)
progress
 Proceeds from disposal of property,
plant and                                     59,676            -
 equipment
 Net cash used in investing activities     (3,625,505)       (17,769,240)
Cash flows from financing activities
 Proceeds from short-term loan             6,428,000         6,662,447
 Proceeds from long-term loan              -                 4,495,863
 Repayment of short-term loans             -                 (13,301,664)
 Restricted cash                           -                 (4,993,263)
 Investment from noncontrolling interests  -                 208,894
 Net cash provided by (used in) financing  6,428,000         (6,927,723)
activities
 Effect of foreign currency exchange rate
fluctuation on                                221,914           109,426
 cash and cash equivalents
 Net changes in cash and cash equivalents  (5,735,190)       (2,619,210)
Cash and cash equivalents, beginning of       11,903,937        19,294,089
period
Cash and cash equivalents, end of period      $6,168,747        $16,674,879
Cash paid during the period for:
Interest paid                                 $374,852          $475,204
Income taxes paid                             $1,008,024        $885,290



SOURCE China Shengda Packaging Group Inc.

Website: http://www.cnpti.com