China Shengda Packaging Group Inc. Reports Full Year 2013 Financial Results
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:
- Revenues 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.
- The 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.
- Gross profit decreased by 13.8% to $19.5 million 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.
- Net income attributable to the Company's stockholders decreased by 50.8%, to $2.7 million for the year of 2013.
- Basic 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
| Sales Analysis (Millions) |
Twelve Months |
Twelve Months |
| Revenues– Paper Cartons (millions) |
$119.4 |
$125.3 |
| Revenues– Corrugating Medium Paper (millions) |
$18.5 |
NA |
| Revenues– Inter-segment Transactions Elimination (millions) |
($3.8) |
NA |
| 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 ('000 tons) |
51.5 |
NA |
| 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 ton) |
$359 |
NA |
|
Summary Results (Millions) |
Twelve Months |
Twelve Months |
| 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 protected]
Website: http://www.cnpti.com
Investor Relations Contact:
Weitian Group LLC
Tina Xiao
Tel: +1-917-609-0333
Email: [email protected]
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, respectively, 38,790,811 outstanding both at December 31, 2013 and 2012) |
38,791 |
39,456 |
||
| Treasury stock (nil and 665,500 shares at December 31, 2013 and 2012, respectively) |
- |
(729,444) |
||
| 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 Packaging |
111,135,481 |
105,033,748 |
||
| 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 noncontrolling interest |
2,554,730 |
6,485,464 |
||
| 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 stockholders |
2,743,946 |
5,575,019 |
||
| Basic and diluted earnings per share |
0 |
0 |
||
| Weighted-average number of shares outstanding - basic and diluted |
38,790,811 |
38,790,811 |
||
| 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 interest |
111,131 |
5,018 |
||
| Net comprehensive income attributable to the Company's common stockholders |
6,101,733 |
6,418,217 |
||
| CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES |
||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
| (Amounts in US$) |
||||
| Year ended 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 equiment |
211,121 |
- |
||
| 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 activities |
(7,987,904) |
27,165,285 |
||
| 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 activities |
7,126,357 |
(6,968,400) |
||
| Effect of foreign currency exchange rate fluctuation on |
298,127 |
156,820 |
||
| 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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