NINGBO, China, May 21 /PRNewswire-Asia/ --
-- Q1 2010 revenue totaled $117.4 million compared to $68.7 million in Q4
2009, the Company's first full quarter of production sales.
-- Q1 2010 net income of $6.7 million, compared to net loss of $8.8
million in Q4 2009.
-- Company provides revenue guidance of approximately $461.3 million and
net income guidance of approximately $36.3 million, excluding public
company expenses, for 2010.
Keyuan Petrochemicals, Inc. (OTC Bulletin Board: SVPE), ("Keyuan" or "the Company"), a leading independent manufacturer and supplier of various petrochemical products in China, today announced the Company's financial results for the first quarter of 2010.
Revenue for the first quarter ended March 31, 2010 totaled $117.4 million, based on the sale of 144,746 metric tons (MT) of a variety of petrochemical products. The Company had no revenue in the quarter ended March 31, 2009, having commenced production in October 2009. In the fourth quarter of 2009, Keyuan generated revenue of $68.7 million, based on the sale of 96,690 MT of a variety of petrochemical products.
For the three months ended March 31, 2010, cost of goods sold was $108.6 million, with gross profit of $8.8 million compared to negative gross profit of $6.7 million in the fourth quarter of 2009.
Operating expenses for the first quarter of 2010 were approximately $0.9 million, consisting of $84,512 in selling expenses and $0.8 million in general and administrative expenses. Operating income totaled $7.9 million.
Net income for the first quarter of 2010 was $6.7 million, net of $1.1 million in interest expense and $0.1 million in non-operating expenses, compared to a net loss of $8.8 million in the fourth quarter of 2009.
"We are pleased with our performance during the first quarter of 2010, as we continued to capitalize on China's growing demand and supply imbalance for refined petrochemical products," stated Mr. Chunfeng Tao, founder, chairman and chief executive officer of the Company. "This growing demand, which has surpassed supply in recent years, has led to record contract signings and backlog for Keyuan's various products. To meet this order backlog and customer demand, we are expanding our production and storage capacity in order to deliver additional tonnage of industry leading products to our customers in China. Like our current production facilities, this expansion will include manufacturing technologies that enable us to achieve above-industry-average margins by reducing raw material costs and increasing utilization rates and yields. As a result, we believe we are well-positioned to drive significant revenue and earnings growth as we continue to build on being a leading producer of refined petrochemical products in China."
Cash, cash equivalents and restricted cash were $28.7 million at March 31, 2010 compared to $20.0 million at December 31, 2009. For the first quarter of 2010, the Company generated $5.5 million in net cash flow from operations. Inventories at March 31, 2010 were $53.3 million and advance payments for the purchase of raw materials amounted to $14.6 million. The Company had no accounts receivable at the end of the quarter. Property, plant and equipment totaled $131.6 million. At March 31, 2010 the Company had total assets of 257.5 million versus 240.1 million in total liabilities, and $17.4 million in total stockholders' equity.
Financial Outlook for 2010
For fiscal year 2010, Keyuan expects to generate revenue of approximately $461.3 million and net income of approximately $36.3 million, excluding public company expenses. In 2010, gross margins are expected to improve to 12%, with net margins expected to improve to 8.0%. This guidance assumes average annual sales volume of 550,000 MT of refined petrochemical product sales in 2010.
Financial Outlook for 2011
For fiscal year 2011, the Company expects to generate revenue of approximately $518.2 million and net income of approximately $48.2 million, excluding public company expenses. In 2011, gross margins are expected to improve to 13.0%, with net margins expected to improve to 9.0%. This guidance assumes average annual volume of 600,000 MT of refined petrochemical product sales in 2011.
Operating Review and Outlook
Growing demand driven by China's robust economic growth, coupled with under-developed domestic production capacity, has led to an imbalance in supply and demand for refined petrochemical products that is likely to persist for many years. As a result of this imbalance, China was forced to import an average of 3.1 million tons of refined petrochemical products per month in 2009. Additionally, China's demand for asphalt has outpaced supply for five consecutive years with total imports of 3.3 million MT in 2008.
Due to the supply-demand imbalance that exists in China, Keyuan's customer order requests for 2010 have exceeded its current annual production capacity. At March 31, 2010, Keyuan had annual petrochemical manufacturing capacity of 550,000 MT of a variety of petrochemical products, as detailed in the following table:
Customer Orders In Excess Of Keyuan's Production (as of December 31, 2009)
Product Line Annual Customer Demand/Capacity
Capacity Demand (MT)
(MT)
BTX Aromatics 345,000 480,000 1.39x
Propylene 51,500 90,000 1.75x
Styrene 36,000 48,000 1.33x
LPG 77,500 93,000 1.20x
In order to grow its business to meet its backlog and increasing customer demand, Keyuan plans to expand its petrochemical manufacturing capacity to 600,000 MT this year. The Company also plans to double its storage capacity to 200,000 MT by the end of 2011, and to add a new raw material pre-treatment facility and an asphalt production facility in 2012.
About Keyuan Petrochemicals, Inc.
Keyuan Petrochemicals, Inc., established in 2007 and operating through its wholly-owned subsidiary, Keyuan Plastics, Co. Ltd., is located in Ningbo, China and is a leading independent manufacturer and supplier of various petrochemical products. Having commenced production in October 2009, Keyuan's operations include an annual petrochemical manufacturing capacity of 550,000 MT of a variety of petrochemical products, with facilities for the storage and loading of raw materials and finished goods, and a technology that supports the manufacturing process with low raw material costs and high utilization and yields. In order to meet increasing market demand, Keyuan plans to expand its manufacturing capacity to include a raw material pre-treatment facility, additional storage capacity and an asphalt production facility.
Cautionary Statement Regarding Forward-Looking Information
This press release may contain certain "forward-looking statements" relating to the business of Keyuan Petrochemicals, Inc., and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding the impact of the proceeds from the private placement on the Company's short term business and operations, the general ability of the Company to achieve its commercial objectives, including the ability of the Company to sustain growth; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward looking statements.
Contacts:
Investor Relations:
HC International, Inc.
Ted Haberfield
Executive VP
Tel: +1-760-755-2716
Email: thaberfield@hcinternational.net
Mr. Andrew Haag, Managing Partner, USA
Hampton Growth, LLC
Tel: +1-877-368-3566
Email: andrew@hamptongrowth.com
Web: www.hamptongrowth.com
