2014

China Industrial Steel, Inc. Reports 2012 Financial Results Company Remains Profitable for the Year, Earning $0.08 for the Year, $0.04 in the Fourth Quarter

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.



More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.