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: email@example.com Website: http://www.cnpti.com Investor Relations Contact: Weitian Group LLC Tina Xiao Tel: +1-917-609-0333 Email: firstname.lastname@example.org 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.
China Shengda Packaging Group Inc. Reports Full Year 2013 Financial Results
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