NEW YORK, Aug. 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
SOURCE China Industrial Steel, Inc.