China Industrial Steel, Inc. Reports Record Financial Results For 2011

NEW YORK, April 30, 2012 /PRNewswire-Asia-FirstCall/ -- China Industrial Steel, Inc. (the "Company") today announced its earnings for the year ended December 31, 2011.  The Company, whose shares trade in the U.S. under the stock symbol "CDNN" filed its Form 10-K with the Securities and Exchange Commission on March 29, 2012.

Highlights of 2011 Year End Financials

• Revenues increased 43% to $ 823 million in 2011 from $574 million in 2010.
• Net income increased 78% to $46 million in 2011 from $26 million in 2010.
• Earnings per share were at $0.62 for the year, compared to $0.39 in 2010.

Total sales for the years ended December 31, 2011 were $823,107,042, an increase of $249,440,358, or 43%, compared to $573,666,684 in 2010. Of the increased revenues, approximately 11% was due to an increase in total selling quantity excluding steel wires, 48% was generated from the recently introduced sale of steel wire; 37% of the increase was attributable to an increase in the sales prices; and the remaining 4% was attributed to the increased sales of byproducts.

The Company reduced its production of steel plates in the fourth quarter of 2011 due to decreased market demand, however the average sales price of steel plate increased $92 per ton, or 17% during 2011, to an average price of approximately $618 per ton from $520 per ton in 2010. The increase in the selling price reflected an increase in cost of raw materials, specifically iron ore which had risen consistently from mid-2009.

China Industrial Steel began producing steel bars in 2010 in response to market demand, however, since that time demand for steel bars and in turn its pricing has fallen off. In light of this, the Company has temporarily stopped manufacturing steel bars and now uses the facility for the production of steel wires. During 2011, the Company sold 195,417 metric tons of steel wires, which generated $119,936,402 of revenue.

Revenue from steel billets more than doubled in 2011, to $209,657,073 from $100,568,635 in 2010. The increase was attributable to increases in both the quantity of steel billets sold as well as the sales price.

Sales of production byproducts also increased substantially, to $17,632,782 in 2011 from $7,277,413 in 2010, a 142% increase.

The following table illustrates the breakdown of the Company's revenue for the year ended December 31, 2011 and 2010.

The Company's net income totaled $45,801,476 in 2011, an increase of $20,031,036, or 78%, compared to the net income of $25,770,440 in 2010. The increase of net income was attributable primarily to the increase of revenue and decrease in selling, general and administrative expenses.Liu Shenghong, Chief Executive Officer and Chairman of the Company commented on the Company's performance in 2011, "The past few years have been challenging for Chinese steel manufacturers due to a number of factors, including tough economic conditions, erratic raw material prices and fluctuating market demand. Despite this, China Industrial Steel performed well in 2011. Demand for our steel products was strong throughout the year, as reflected in our results."

Mr. Liu commented further, saying, "While the overall recovery of China's steel market is still fragile, we continue to remain optimistic about China Industrial Steel's future. We are dedicated to serving our customer's needs and our infrastructure and management flexibility enables us to move quickly in response to market changes. The benefit of this is evident in the decision to convert our bar production facilities to the production of steel wire, which continues to generate financial rewards. Sale of steel wire generated nearly $120 million in revenue in 2011."

Mr. Liu went on to say, "Our Company came to the market in the United States by filing an S-1 registration statement with the Securities and Exchange Commission. We are also pleased that FINRA has designated a symbol for the common stock of China Industrial Steel, which will shortly begin to trade under the symbol CDNN, and we are hopeful that we will be able to leverage the benefits of being a public company – specifically to be able to access foreign capital so that we can fully implement our company's expansion plans."

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.

Company contact:
China Industrial Steel, Inc.
Phone: +1-646-328-1502

China Industrial Steel, Inc.

Contacts:

Frank Pena – Director
(732) 292-0322

Jeffrey Friedland – Corporate Finance Advisor
646-450-8909

SOURCE China Industrial Steel, Inc.