NEW YORK, August 20, 2012 /PRNewswire-Asia/ -- China Industrial Steel, Inc. (the "Company") today announced its earnings for the three months ended June 30, 2012. The Company filed its Form 10-Q with the Securities and Exchange Commission on August 14, 2012.
Sales for the three months ended June 30, 2012 were $145,572,369, a decrease of $71,226,932, or 33%, compared to $216,799,301 in the comparable period in 2011. Approximately $13.3 million, or 19% of the decrease was due to a decrease in the average sales price and 81% was due to decrease in the quantity sold offset by the new steel wire products.
Gross profit margin was 3.06% in the three months ended June 30, 2012, a decrease of 3.59 percentage points, compared to 6.65% in the same period of 2011. The decrease in gross profit margin resulted mainly from decreased sales price of steel products.
Net income totaled $1,848,517 in the three months ended June 30, 2012, a decrease of $8,855,692, or 83%, compared to the net income of $10,704,209 in the comparable period of 2011. The decrease of net income was attributable primarily to the decrease in revenue, gross profit margin and an increase in selling, general and administrative expenses.
Liu Shenghong, Chief Executive Officer and Chairman of the Company commented on the Company's performance, "This has been a challenging year for China's steel industry, and our Company was not an exception. According to the Association of Chinese Steel Industry, 34% of steel manufacturers are experiencing losses, and while our results are off from last year, I am pleased to report that China Industrial Steel has remained profitable throughout this downturn."
Mr. Liu went on to say "Although economic recovery has been slower than expected worldwide, we expect that China's growth will be a significant driver in the turnaround, and we are working to ensure that China Industrial Steel will fully participate in that growth. In addition to shifting our existing production capabilities to the highest margin product mix, we are evaluating financing alternatives to increase our capacity for specialized steel products, the first of which will be a Galvalume production facility. Galvalume is a coated steel product, which is primarily used in the automotive and home appliance industries."
CHINA INDUSTRIAL STEEL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN US DOLLARS) (UNAUDITED) | ||
June 30, 2012 | December 31, 2011 | |
ASSETS | ||
Current Assets: | ||
Cash | $226,961 | $1,737,495 |
Bank notes receivable | 698,919 | 2,342,186 |
Accounts receivables, net | 12,115,630 | 20,862,269 |
Inventories, net | 13,803,390 | 16,139,936 |
Advances to suppliers | 2,151,348 | 3,215,680 |
VAT tax recoverable | 22,624,414 | 21,612,482 |
Advances to related parties | 118,087,616 | 77,416,285 |
Total Current Assets | 169,708,278 | 143,326,333 |
Machinery and Equipment, Net | 82,659,717 | 84,410,398 |
Machinery and Equipment - acquired from related parties, Net | 95,921,717 | 98,514,249 |
Total Machinery and Equipment, Net | 178,581,434 | 182,924,647 |
Other Assets: | ||
Restricted cash | 7,240,860 | 5,402,600 |
Land use rights and buildings under capital leases | 5,224,956 | 5,613,105 |
Total Other Assets | 12,465,816 | 11,015,705 |
TOTAL ASSETS | $359,290,886 | $337,266,685 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current Liabilities: | ||
Accounts payable | 90,138,703 | 23,095,827 |
Accounts payable - related parties | 426,409 | 184,447 |
Accrued liabilities | 2,384,275 | 2,622,224 |
Taxes payables | 536,212 | 1,868,886 |
Bank loans payable | 26,114,319 | 34,640,200 |
Bank notes payable | 5,981,580 | 3,019,100 |
Equipment loan payable - related parties | 3,896,141 | 11,562,752 |
Current obligations under capital leases - related parties | 614,009 | 597,258 |
Short term loan payable - related party | 787,050 | 1,747,900 |
Advances from customers | 30,338,502 | 13,257,487 |
Total Current Liabilities | 161,217,200 | 92,596,081 |
Long Term Liabilities: | ||
Equipment loan payables - related parties | - | 51,093,694 |
Obligation under capital leases - related parties | 5,878,122 | 6,254,954 |
Total Long Term Liabilities | 5,878,122 | 57,348,648 |
TOTAL LIABILITIES | 167,095,322 | 149,944,729 |
Stockholders' Equity: | ||
Common stock, $0.0001 par value, 980,000,000 authorized, 73,542,058 issued and outstanding | 7,362 | 7,354 |
Paid-in capital | 16,417,235 | 16,299,744 |
Statutory reserves | 6,530,869 | 6,530,869 |
Retained earnings | 156,744,078 | 150,189,517 |
Accumulated other comprehensive income | 12,496,020 | 14,294,472 |
Total Stockholders' Equity | 192,195,564 | 187,321,956 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $359,290,886 | $337,266,685 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN US DOLLARS) (UNAUDITED)
| ||||
Three Months Ended June 30, | Six Months Ended June 30, | |||
2012 | 2011 | 2012 | 2011 | |
Revenues | ||||
Sales to customers | $141,355,618 | $195,513,869 | $312,794,486 | $383,038,685 |
Sales to related parties | 4,216,751 | 21,285,432 | 9,806,531 | 21,285,432 |
Total Revenues | 145,572,369 | 216,799,301 | 322,601,017 | 404,324,117 |
Cost of Revenue | ||||
Cost of Revenue - non-related parties | 75,016,983 | 26,715,484 | 124,906,457 | 48,852,768 |
Cost of Revenue - related parties | 66,098,486 | 175,674,549 | 184,413,577 | 330,635,538 |
Total Cost of Revenue | 141,115,469 | 202,390,033 | 309,320,034 | 379,488,306 |
Gross Profit | 4,456,900 | 14,409,268 | 13,280,983 | 24,835,811 |
Selling and General and Administrative Expenses | ||||
SG&A Expenses - non-related parties | 295,977 | 412,040 | 1,361,056 | 859,287 |
SG&A Expenses - related parties | 705,826 | 216,799 | 882,909 | 403,449 |
Total SG&A Expenses | 1,001,803 | 628,839 | 2,243,965 | 1,262,736 |
Income From Operations | 3,455,097 | 13,780,429 | 11,037,018 | 23,573,075 |
Other Income (Expenses) | ||||
Interest income | 2,120 | 8,328 | 54,609 | 8,543 |
Interest expense - bank and private borrowings | (921,177) | (124,846) | (1,866,085) | (574,596) |
Interest expense - related parties | (323,521) | (1,133,459) | (1,286,589) | (2,198,775) |
Total Other Income (Expenses) | (1,242,578) | (1,249,977) | (3,098,065) | (2,764,828) |
Income from operation before income tax | 2,212,519 | 12,530,452 | 7,938,953 | 20,808,247 |
Provision for income tax | 364,002 | 1,826,243 | 1,384,392 | 2,971,264 |
Net Income | $1,848,517 | $10,704,209 | $6,554,561 | $17,836,983 |
Earnings Per Share - Basic and Diluted | $0.03 | $0.15 | $0.09 | $0.24 |
Weighted Average Shares Outstanding | 73,595,428 | 73,542,058 | 73,568,597 | 73,159,247 |
Other Comprehensive Income: | ||||
Foreign currency translation (loss) gain | (1,678,398) | 1,931,889 | (1,798,452) | 3,013,380 |
Comprehensive Income | 170,119 | 12,636,098 | 4,756,109 | 20,850,363 |
About China Industrial Steel, Inc.
China Industrial Steel, Inc., ("CIS" or the "Company") through its wholly owned subsidiary, Handan Hongri Metallurgy Co., Ltd., produces and sells steel plate and steel bar for domestic and export customers. The Company currently operates three production lines from its headquarters on approximately 1,000 acres in Handan City in the Hebei Province, China, where steel production is a significant component of the regional economy.
Forward-looking Statements:
The above news release contains forward-looking statements. The statements contained in this document that are not statements of historical fact, including but not limited to, statements identified by the use of terms such as "anticipate," "appear," "believe," "could," "estimate," "expect," "hope," "indicate," "intend," "likely," "may," "might," "plan," "potential," "project," "seek," "should," "will," "would," and other variations or negative expressions of these terms, including statements related to expected market trends and the Company's performance, are all "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. These statements are based on assumptions that management believes are reasonable based on currently available information, and include statements regarding the intent, belief or current expectations of the Company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performances, and are subject to a wide range of external factors, uncertainties, business risks, and other risks identified in filings made by the company with the Securities and Exchange Commission. Actual results may differ materially from those indicated by such forward-looking statements. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances upon which any statement is based.
China Industrial Steel, Inc.
Contacts:
Frank Pena - Director
(732) 292-0322
Delong Zhou - Chief Financial Officer
Phone +1-917-825-2997