China Shengda Packaging Group Inc. Reports Full Year 2013 Financial Results

 China Shengda Packaging Group Inc. Reports Full Year 2013 Financial Results

PR Newswire

HANGZHOU, China, March 28, 2014

HANGZHOU, China, March 28, 2014 /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
fiscal year ended December 31, 2013.

"2013 was another challenging year for the paper packaging industry as China's
economy appeared to lose some steam in the past couple of years. This,
combined with tightened credit environment, compelled many of our customers to
put their expansion plans on hold, and therefore, our ability to grow our
paper carton business. Despite these challenges, we grew our revenues by 7.1%
to $134.2 million with the paper mill at our Shuangsheng subsidiary,
generating $18.5 million in sales which offset the slight decline in our paper
carton business," commented Mr. Daliang Teng, Chief Executive Officer of
Shengda, "Looking ahead, as the central government starts to induce a
transition from the pursuit of pure GDP growth to more sustainable and quality
economic growth, we believe the outlook for the paper packaging industry
remains tempered in the near term. However, as we continue focusing on growing
our business through both vertical integration and geographical expansion, we
are confident of the long-term growth prospect of our business."

Full Year 2013 Financial Highlights:

  oRevenues increased by 7.1% year-over-year to $134.2 million for the year
    of 2013 with revenues of paper cartons and other paper products decreasing
    4.7% to $119.4 million mainly due to decrease in sales volume. 
  oThe paper mill at our Shuangsheng subsidiary, which officially went into
    production in June 2013, produced 51.5 thousand tons of corrugating medium
    paper and generated $18.5 million in revenues for the year of 2013.
  oGross profit decreased by 13.8% to $19.5million for the year of 2013.
    Gross margin was 14.5% for the year of 2013 compared to 18.0% for the year
    of 2012. The decreases in gross profit and gross margin were mainly
    related to high production cost of corrugating medium paper at our paper
    mill.
  oNet income attributable to the Company's stockholders decreased by 50.8%,
    to $2.7 million for the year of 2013.
  oBasic and diluted earnings per share were $0.07 for the year of 2013,
    compared to $0.14 for the year of 2012.

Twelve Months Ended December 31, 2013 Results

                                         Twelve Months      Twelve Months
Sales Analysis (Millions)                Ended December 31, Ended December 31,
                                         2013               2012
Revenues– Paper Cartons (millions)       $119.4             $125.3
Revenues– Corrugating Medium Paper       $18.5              NA
(millions)
Revenues– Inter-segment Transactions     ($3.8)             NA
Elimination (millions)
Color Cartons (% of total revenues)      26.3%              28.7%
Flexo Cartons (% of total revenues))     62.7%              71.3%
Paper Cartons Sales Volume (M sq meters) 301.2              317.4
Corrugating Medium Paper Sales Volume    51.5               NA
('000 tons)
Color Cartons (avg price per sq meter)   $0.41              $0.42
Flexo Cartons (avg price per sq meter)   $0.39              $0.39
Corrugating Medium Paper (avg price per  $359               NA
ton)
                                                           

                                         Twelve Months      Twelve Months
Summary Results (Millions)               Ended December 31, Ended December 31,
                                         2013               2012
Revenues                                 $134.2             $125.3
Gross Profit                             $19.5              $22.6
Gross Margin (%)                         14.5%              18.0%
Operating Expenses                       $17.3              $16.1
Operating Income                         $2.1               $6.5
Operating Margin (%)                     1.6%               5.2%
Net Income attributable to stockholders  $2.7               $5.6
EPS Basic & Diluted                      $0.07              $0.14
Wtd Avg Shares Outstanding (millions)    38.8               38.8

Total revenues for the year ended December 31, 2013 increased by $8.9 million,
or 7.1% to $134.2 million from $125.3 million for the year of 2012. Revenues
of paper cartons and other paper products decreased by $5.9 million, or 4.7%,
to $119.4 million for the year of 2013 from $125.3 million for the year of
2012. The decrease in revenues of paper cartons was a result of continued
challenges in domestic and foreign economic environment that led to 5.1%
decline in sales volume of paper cartons to 301.2 million square meters for
the year of 2013 from 317.4 million square meters for the year of 2012. Our
paper mill generated $18.5 million revenues from corrugating medium paper with
sales volume of 51.5 thousand tons and average selling price of $359 per ton.
Eliminating internal sales of approximately $3.8 million, revenues of external
sales of corrugating medium paper was $14.7 million or 11% of total revenues
for the year of 2013.

Color cartons and flexo cartons accounted for 26.3% and 62.7% of total
revenues for the year of 2013, compared to 28.7% and 71.3%, respectively, for
the year of 2012. Average sales prices per square meter for color cartons and
flexo cartons were approximately $0.41 and $0.39, respectively, for the year
of 2013, compared to approximately $0.42 and $0.39, respectively, for the year
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 23.6% and 24.3%, respectively, of
total revenues for the year of 2013, compared to 23.2% and 30.1%,
respectively, of total revenues for the year of 2012.

Gross profit decreased by $3.1 million, or 13.8%, to $19.5 million for the
year of 2013 from $22.6 million for the year of 2012. Gross margin dropped by
approximately 3.5 points to 14.5% for the year of 2013 from 18.0% for the year
of 2012. Gross profit of paper cartons and other paper products decreased by
$0.1 million, or 0.3%, to $22.5 million for the year of 2013 from $22.6
million for the year of 2012. Gross profit of corrugating medium paper was
negative $3.0 million as we continued to ramp up the production at our paper
mill.

Selling expenses increased by $0.7 million, or 13.7%, to $5.8 million for the
year of 2013 from $5.1 million for the year of 2012. The increase was mainly
due to higher business development expenses and freight expenses. As a
percentage of revenues, selling expenses for the year of 2013 increased to
4.3% from 4.1% for the year of 2012.

General and administrative expenses increased by $0.5 million, or 4.7%, to
$11.5 million for the year of 2013 from $11.0 million for the year of 2012.
This increase was mainly due to the increase in staff costs, which include
salary, benefits, social insurance and other relevant staff expenses. As a
percentage of revenues, general and administrative expenses for the year of
2013 decreased to 8.6% from 8.8% for the year of 2012.

Net income attributable to the Company's common stockholders decreased by $2.9
million, or 50.8%, to $2.7 million for the year of 2013, from $5.6 million for
the year of 2012. Basic and diluted earnings per share were $0.07 for the year
of 2013, compared to $0.14 for the year of 2012.

Financial Condition

As of December 31, 2013, the Company had cash and cash equivalents of $6.6
million and restricted cash of $10.1 million. Shareholders' equity was $111.4
million, compared to $105.4 million at December 31, 2012. Net cash used in
operating activities was $8.0 million for the year of 2013, compared to net
cash provided by operating activities of $27.2 million for the year of 2012.
This was attributable to net income of $2.6 million, adjusted by depreciation
and amortization expenses of $6.0 million, and a net decrease in cash from
accounts and notes payable of $13.7 million and a net decrease in cash from
other working capital items of $2.9 million. Net cash used in investing
activities was $4.8 million for the year of 2013, compared to $27.7 million
for the year of 2012. The $4.8 million was used for purchases of property,
plant and equipment. Net cash provided by financing activities was $7.1
million for the year of 2013, compared to $7.0 million net cash used in
financing activities for the year of 2012. During the year ended December 31,
2013, we received loan proceeds amounting to $6.5 million, prepaid $4.4
million loans and received restricted cash of $5.1 million which was for the
notes payable and loans as collateral.

Recent Developments

On December 20, 2013, the Company held its annual general meeting of
shareholders in Hangzhou, Zhejiang Province. Nengbin Fang, Congyi Fang,
Yaoquan Zhang, Zhihai Mao and Michael Zhang were re-elected to the Board of
Directors of the Company. Shareholders also ratified the appointment of Marcum
Bernstein & Pinchuk LLP as the independent registered public accounting firm
of the Company for the fiscal year ending December 31, 2013.

In February 2014, Great Shengda passed the National High-Tech Enterprise
status review, which is recognized by China's Ministry of Science and
Technology, Ministry of Finance, and State Administration of Taxation. As a
result, Great Shengda is entitled to a preferential tax rate of 15% for
another three years, retroactively effective as of January 1, 2013.

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 corrugating medium 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$)
                                                   December 31,
ASSETS                                            2013           2012
Current assets
Cash and cash equivalents                          $6,569,495     11,903,937
Restricted cash                                    10,129,756     22,615,099
Accounts and notes receivable, net                 42,710,653     33,203,457
Inventories                                        18,605,074     15,543,213
Prepayments and other receivables                  1,583,203      955,953
Amount due from related parties                    225,822        207,112
Deductible value added tax                         3,056,867      -
Total current assets                               82,880,870     84,428,771
Non-current assets
Property, plant and equipment, net                 68,481,643     70,184,832
Land use right                                     11,988,879     11,881,160
Customer relationships, net                        -              74,766
Deferred tax assets                                1,505,981      403,121
Goodwill                                           181,481        175,941
Total assets                                       $165,038,854   167,148,591
LIABILITIES AND EQUITY
Current liabilities
Accounts and notes payable                         $32,820,222    45,246,615
Amounts due to related party                       2,131,846      269,505
Accrued expenses and other payables                2,889,933      2,310,270
Taxes payable                                      1,215,127      1,360,386
Short-term loans                                   10,048,000     3,500,000
Current portion of long-term borrowing             4,500,000      4,500,000
Total current liabilities                          53,605,128     57,186,776
Non-current liabilities
Long-term loans                                    -              4,500,000
Deferred tax liabilities                           -              18,691
 Total liabilities                              $53,605,128    61,705,467
Commitment and contingencies                                   - -
Equity
Stockholders' equity
Common stock (US$0.001 par value, 190,000,000
shares authorized, 38,790,811 and 39,456,311
shares issued at December 31, 2013 and 2012,       38,791         39,456
respectively, 38,790,811 outstanding both at
December 31, 2013 and 2012)
Treasury stock (nil and 665,500 shares at          -              (729,444)
December 31, 2013 and 2012, respectively)
Additional paid-in capital                         43,036,464     43,765,243
Appropriated retained earnings                     7,240,218      6,997,530
Unappropriated retained earnings                   48,360,582     45,859,324
Accumulated other comprehensive income             12,459,426     9,101,639
Total equity for stockholders of China Shengda    111,135,481    105,033,748
Packaging
Noncontrolling interest                            298,245        409,376
 Total equity                                   111,433,726    105,443,124
Total liabilities and equity                       $165,038,854   167,148,591
CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Amounts in US$)
                                                   Year ended December 31,
                                                   2013           2012
Revenues                                           134,182,900    125,308,951
Cost of goods sold                                 114,729,483    102,739,063
Gross profit                                       19,453,417     22,569,888
Operating expenses
Selling expenses                                   5,774,715      5,080,011
General and administrative expenses                11,535,135     11,019,764
                                                   17,309,850     16,099,775
Other income (expenses)
Interest income                                    847,575        353,458
Interest expense                                   (835,975)      (717,946)
Subsidy income                                     813,213        352,748
Other income (expense)                             (211,121)      27,091
                                                   613,692        15,351
Non operating expenses                             202,529        -
Income before income tax expense and               2,554,730      6,485,464
noncontrolling interest
Income tax expense (benefit)                       (79,579)       915,461
Net income                                         2,634,309      5,570,003
Net loss attributable to noncontrolling interest   109,637        5,016
Net income attributable to Company's common        2,743,946      5,575,019
stockholders
Basic and diluted earnings per share               0              0
Weighted-average number of shares outstanding -    38,790,811     38,790,811
basic and diluted
Comprehensive income:
Net income                                         2,634,309      5,570,003
Foreign currency translation adjustment            3,356,293      843,196
Comprehensive income                               5,990,602      6,413,199
Comprehensive loss attributable to noncontrolling  111,131        5,018
interest
Net comprehensive income attributable to the       6,101,733      6,418,217
Company's common stockholders
CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in US$)
                                                   Yearended December 31,
                                                   2013           2012
Cash flows from operating activities
Net income                                         2,634,309      5,570,003
Adjustments to reconcile net income to net cash
provided by operating activities:
 Depreciation and amortization expenses          6,024,574      4,541,247
 Loss from disposal of property, plant and       211,121        -
equiment
Change in operating assets and liabilities:
 Restricted cash                                 7,932,880      (9,696,077)
 Accounts and notes receivable                   (8,325,237)    3,941,038
 Inventories                                     (2,537,833)    4,066,201
 Prepayments and other receivables               (611,783)      (14,905)
 Accounts and notes payable                      (13,660,440)   20,189,874
 Amount due from(to) related party               1,816,916      58,256
 Deferred tax                                    (1,094,535)    (109,870)
 Accrued expenses and other payables             93,132         645,088
 Tax payables                                    (471,008)      (2,025,570)
 Net cash provided by (used in) operating        (7,987,904)    27,165,285
activities
Cash flows from investing activities
 Purchase of property, plant and equipment       (4,877,444)    (27,743,857)
 Disposal of property, plant and equipment       106,422        -
 Net cash used in investing activities           (4,771,022)    (27,743,857)
Cash flows from financing activities
 Proceeds from short-term loans                  6,460,000      6,671,614
 Proceeds from long-term loan                    -              4,473,943
 Repayment of short-term loans                   (4,420,893)    (13,326,141)
 Restricted cash                                 5,087,250      (4,997,303)
 Investment from non controlling interests       -              209,487
 Net cash flows provided by (used in) financing  7,126,357      (6,968,400)
activities
 Effect of foreign currency exchange rate
fluctuation on                                     298,127        156,820
 cash and cash equivalents
 Net changes in cash and cash equivalents        (5,334,442)    (7,390,152)
Cash and cash equivalents, beginning of year       11,903,937     19,294,089
Cash and cash equivalents, end of year             6,569,495      11,903,937
Cash paid during the year for:
Interest paid                                      826,842        658,335
Income taxes paid                                  1,248,707      1,171,447

SOURCE China Shengda Packaging Group Inc.
 
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