NEW YORK, April 2, 2013 /PRNewswire/ -- China Industrial
Steel, Inc. (the "Company") today announced its earnings for the
year ended December 31, 2012.
The Company, whose shares trade in the U.S. OTC market under
the stock symbol "CDNN", filed its Form 10-K with the Securities
and Exchange Commission on April 1,
2013.
Commenting on the results, Liu Shenghong, Chief Executive
Officer and Chairman of the Company stated, "I am pleased to report
our earnings for 2012. I believe the fourth quarter of 2012 was
pivotal for Chinese steel manufacturers in general and China
Industrial Steel in particular. Although approximately one-third of
steel manufacturers are still operating at a loss, it does seem
that prices have bottomed out and demand for steel is trending up
as the Government's efforts to spur economic growth take hold.
Chairman Liu went on to say, "Our ability to remain profitable
through the recent global economic crisis is a testament to the
expertise and determination of our team and the quality of our
products. In 2011 we had the foresight to transition our steel bar
production to steel wire production to adapt to changes in market
demand. This adjustment helped offset the negative impact of market
conditions in early 2012 and contributed to the jump in
profitability in the fourth quarter."
Chairman Liu concluded, "The steel plate, wire and bar that we
manufacture today are used primarily in the construction of
buildings and in large scale infrastructure projects, such as roads
and bridges, all of which are being cultivated by recently
announced government stimulus programs. We will continue working to
mitigate the effect of market pricing of both raw material and
finished products on our financial results through the management
of our production mix and systematic shift to specialty steel
products. I am confident that these tactics will continue to
facilitate our return to solid revenue growth and improved
margins."
Financial Discussion
China Industrial Steel reported total revenues of $649,318,792 in 2012, a decrease of $173,788,250, or 21% compared to $823,107,042 in 2011. Of the decreased revenues,
approximately $117 million, or 68% of
the decrease was due to a decrease in the average sales price of
steel products; $51 million, or 29%
of the decrease was due to decrease in the quantity of steel
products sold, and $5 million, or 3%
was due to the decrease in the revenue of byproducts.
The Company reduced its production of steel plates in 2012 due
to lower sales price and lack of market demand. The Company sold
658,425 tons of steel plates in 2012, a decrease of 109,949 tons or
14%, compared to 768,374 tons in 2011. Revenue from steel plates
was $335,591,348 in 2012, a decrease
of $139,354,856, or 29% compared to
$474,946,204 in 2011. The average
unit sales price of steel plates was approximately $510 per ton in 2012, a decrease of $108 per ton, or 17%, from $618 in 2011.
In 2011, the Company modified its steel bar production line to
produce steel wires to adapt to the market demand which helped
offset the negative market impact in 2012. In 2012, revenue from
steel wires was $236,557,650, an
increase of $115,686,667, or 96%,
compared to $120,870,983 in 2011. The
Company sold 453,595 metric tons of steel wires, an increase of
256,525 metric tons, or 130%, compared to 197,070 in 2011. However,
the increase in sales of steel wires was offset by the decrease in
the unit sales price. The average unit sales price of steel wires
was approximately $522 per ton in
2012, a decrease of $91 per ton, or
15%, from $613 per ton in 2011.
The following table illustrates the breakdown of the Company's
revenue for the year ended December 31,
2012 and 2011.
|
|
2012
|
|
2011
|
Products
|
|
Revenue
|
|
Quantity
(Ton)
|
|
Revenue
|
|
Quantity
(Ton)
|
Steel
plates
|
|
$
335,591,348
|
|
658,425
|
|
$
474,946,204
|
|
768,374
|
Steel
wires / bars
|
|
236,557,650
|
|
453,595
|
|
120,870,983
|
|
197,070
|
Steel
billets
|
|
64,888,724
|
|
121,559
|
|
209,657,073
|
|
368,544
|
Byproducts
and others
|
|
12,281,070
|
|
-
|
|
17,632,782
|
|
-
|
Products
Total
|
|
$
649,318,792
|
|
1,233,579
|
|
$
823,107,042
|
|
1,333,988
|
The Company reported net income of $5,934,990 for the year ended December 31, 2012, $3,128,709 of that was earned in the fourth
quarter, offsetting the loss reported in the third quarter. Net
income was down considerably as compared to 2011, primarily as a
result of the decrease in sales price of the Company's products as
discussed above. The average sales price per ton decreased by 15%,
5 percentage points (150%) higher than the 10% decrease in average
cost of sales per ton.
CHINA
INDUSTRIAL STEEL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AT
(AUDITED AND IN US DOLLARS)
|
|
|
December
31,
|
|
December
31,
|
|
|
2012
|
|
2011
|
ASSETS
|
|
|
|
Current Assets:
|
|
|
|
|
Cash
|
$1,710,887
|
|
$1,737,495
|
|
Bank
notes receivable
|
979,111
|
|
2,342,186
|
|
Accounts receivables, net
|
9,639,396
|
|
20,862,269
|
|
Inventories, net
|
11,585,277
|
|
16,139,936
|
|
Advances to suppliers, net
|
2,372,693
|
|
3,215,680
|
|
VAT
recoverable
|
32,208,807
|
|
21,612,482
|
|
Advances to related parties
|
183,797,203
|
|
77,416,285
|
|
Other current assets
|
3,884,342
|
|
-
|
|
Total Current
Assets
|
246,177,716
|
|
143,326,333
|
Machinery and Equipment, Net
|
101,450,993
|
|
84,410,398
|
Machinery and Equipment - acquired from related
parties, Net
|
85,471,360
|
|
98,514,249
|
|
Total
Machinery and Equipment, Net
|
186,922,353
|
|
182,924,647
|
Other Assets:
|
|
|
|
|
Restricted cash
|
5,778,360
|
|
5,402,600
|
|
Land
use rights and buildings under capital leases
|
4,985,732
|
|
5,613,105
|
|
Total Other
Assets
|
10,764,092
|
|
11,015,705
|
TOTAL ASSETS
|
$443,864,161
|
|
$337,266,685
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
Current Liabilities:
|
|
|
|
|
Accounts payable
|
$92,228,161
|
|
$23,095,827
|
|
Accounts payable - related parties
|
1,833,558
|
|
184,447
|
|
Accrued liabilities
|
3,123,315
|
|
2,622,224
|
|
Taxes payables
|
2,427
|
|
1,868,886
|
|
Bank
loans payable
|
26,034,722
|
|
34,640,200
|
|
Bank
notes payable
|
5,296,830
|
|
3,019,100
|
|
Equipment loan payable - related parties -
current
|
2,884,919
|
|
11,562,752
|
|
Current obligations under capital leases -
related parties - current
|
648,893
|
|
597,258
|
|
Short term loan payable - related
party
|
802,550
|
|
1,747,900
|
|
Customer financing
|
31,620,470
|
|
-
|
|
Advances from customers
|
77,275,327
|
|
13,257,487
|
|
Total Current
Liabilities
|
241,751,172
|
|
92,596,081
|
Long
Term Liabilities:
|
|
|
|
|
Equipment loan payables - related parties - non
current
|
1,087,952
|
|
51,093,694
|
|
Obligation under capital leases - related
parties - non current
|
5,669,438
|
|
6,254,954
|
|
Total Long Term
Liabilities
|
6,757,390
|
|
57,348,648
|
TOTAL LIABILITIES
|
248,508,562
|
|
149,944,729
|
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
Common
stock, $0.0001 par value, 980,000,000 authorized, 73,620,391 and
73,542,058 issued and outstanding at December 31, 2012 and 2011,
respectively
|
7,362
|
|
7,354
|
|
Paid-in capital
|
16,417,235
|
|
16,299,744
|
|
Statutory reserves
|
6,530,869
|
|
6,530,869
|
|
Retained earnings
|
156,124,507
|
|
150,189,517
|
|
Accumulated other comprehensive
income
|
16,275,626
|
|
14,294,472
|
|
Total
Stockholders' Equity
|
195,355,599
|
|
187,321,956
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$443,864,161
|
|
$337,266,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHINA
INDUSTRIAL STEEL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (IN US
DOLLARS)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
|
|
|
|
|
|
|
2012
|
|
2011
|
Revenues
|
|
|
|
|
Sales to
customers
|
$
623,373,273
|
|
$
796,011,478
|
|
Sales to
related parties
|
25,945,519
|
|
27,095,564
|
|
Total Revenues
|
649,318,792
|
|
823,107,042
|
Cost of
Revenue
|
|
|
|
|
Cost of
Revenue - non-related parties
|
304,795,870
|
|
92,311,499
|
|
Cost of
Revenue - related parties
|
329,666,806
|
|
669,334,535
|
|
Total Cost of Revenue
|
634,462,676
|
|
761,646,034
|
Gross
Profit
|
14,856,116
|
|
61,461,008
|
|
|
|
|
|
Selling
and General and Administrative Expenses
|
|
|
|
|
Selling
and General and Administrative Expenses - non-related
parties
|
2,225,060
|
|
1,695,836
|
|
Selling
and General and Administrative Expenses - related
parties
|
1,147,775
|
|
804,541
|
|
Total
Selling and General and Administrative Expenses
|
3,372,835
|
|
2,500,377
|
Income
From Operations
|
11,483,281
|
|
58,960,631
|
Other
Income (Expenses)
|
|
|
|
|
Interest
income
|
194,673
|
|
67,303
|
|
Interest
expense - bank and private borrowings
|
(2,855,244)
|
|
(1,505,340)
|
|
Interest
expense - related parties
|
(1,705,435)
|
|
(4,405,934)
|
|
Other
income
|
203,655
|
|
117,255
|
|
Total Other Income
(Expenses)
|
(4,162,351)
|
|
(5,726,716)
|
|
|
|
|
|
Income
from operation before income tax
|
7,320,930
|
|
53,233,915
|
Provision
for income tax
|
1,385,940
|
|
7,432,439
|
Net
Income
|
$
5,934,990
|
|
$
45,801,476
|
|
Earnings
Per Share - Basic and Diluted
|
$
0.08
|
|
$
0.62
|
|
Weighted
Average Shares Outstanding - Basic and Diluted
|
73,594,852
|
|
73,351,698
|
Other
Comprehensive Income:
|
|
|
|
|
Foreign
currency translation gain
|
1,981,154
|
|
7,753,060
|
Comprehensive Income
|
$
7,916,144
|
|
$
53,554,536
|
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:
Delong Zhou, CFO
China Industrial Steel, Inc.
Phone: (917) 825-2997
Email: ir@chinaindustrialsteel.com
Frank Pena - Director
(732) 292-0322
SOURCE China Industrial Steel, Inc.