China Shengda Packaging Group Reports Third Quarter 2013 Results

HANGZHOU, China, Nov. 13, 2013 /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 third quarter ended September 30, 2013. 

Mr. Daliang Teng, Chief Executive Officer of China Shengda Packaging Group commented, "Despite continued challenges in economic environment, we continued to grow our paper cartons business in the third quarter which grew 3.1% to the highest level since 2Q12. We are also pleased to see our paper mill starting to contribute meaningfully to our business, generating $5.9 million, or approximately 15% of total revenues, in the third quarter. With the continuing ramp of the paper mill and our heightened efforts in sales and marketing for our paper carton business, we believe Shengda is well positioned in years to come."

Third Quarter 2013 Financial Highlights:

  • Revenues increased by 20.9% year-over-year to $39.9.million for the third quarter of 2013 with revenues for paper cartons and other paper products increasing 3.1% to $34.1 million and revenues for raw paper contributing $5.9 million.
  • Gross profit decreased by 10.8% to $5.4 million for the third quarter of 2013 from $6.0 million for the same period of 2012. Gross margin of 13.4% for the third quarter of 2013 compared to 18.2% for the same period of last year.
  • Net income attributable to the Company's stockholders decreased by $0.9 million, or 60.7%, to $0.5 million for the third quarter of 2013 from $1.4 million for the same period of last year.
  • Basic and diluted earnings per share were $0.01 for the third quarter of 2013, as compared to $0.04 for the same period of last year.

Sales Analysis (Millions)

Three Months
Ended  
September 30,
2013

Three Months
Ended
September 30,
2012




Revenues– Paper Cartons (millions)

$34.1

$33.0

Revenues– Raw Paper (millions)

$5.9

NA

Color Cartons (% of paper cartons revenues)

29.5%

31.3%

Flexo Cartons (% of paper cartons revenues)

70.5%

68.7%

Paper Cartons Sales Volume (M sq meters)

85.1

84.4

Raw paper Sales Volume ('000 tons)

16.4

NA

Color Cartons  (avg price per sq meter)

$0.41

$0.41

Flexo Cartons (avg price per sq meter)

$0.40

$0.38

Raw Paper (avg price per ton)

$357

NA

 

Summary Results (Millions)

 

Three Months
Ended
September 30,
2013

Three Months
Ended
September 30,
2012




Revenues

$39.9

$33.0

Gross Profit

$5.4

$6.0

Gross Margin (%)

13.4%

18.2%

Operating Expenses

$4.7

$4.3

Operating Income

$0.7

$1.7

Operating Margin (%)

1.7%

5.1%

Net Income attributable to the Company's
stockholders

$0.5

$1.4

EPS Basic & Diluted

$0.01

$0.04

Wtd Avg Shares Outstanding (millions)

38.8

38.8

Three Months Ended September 30, 2013 Results

Total revenues for the third quarter of 2013 increased by $6.9 million, or 20.9%, to $39.9 million from $33.0 million for the same period of 2012. Revenues of paper cartons and other paper products increased by $1.1 million, or 3.1%, to $34.1 million for the third quarter of 2013 from $33.0 million for the same period of last year. Our paper mill, which went into production in June 2013, contributed $5.9 million, or 14.7% of total revenues, with sales volume of 16.4 thousand tons and average price of $357 per ton. The increase in both sales volume and average price contributed to the increase in revenues from paper cartons. The sales volume of paper cartons increased by 0.7 million square meters to 85.1 million square meter for the third quarter of 2013 from 84.4 million square meters for the same period of 2012. Average sales price increased 2.4% to approximately $0.40 per square meter for the third quarter of 2013 from approximately $0.39 per square meter in the third quarter of 2012. The increase in sales volume of paper cartons was mainly because of greater efforts by our sales team, despite challenging domestic and foreign economic environment.

Color cartons and flexo cartons accounted for 29.5% and 70.5% of revenues of paper cartons and other paper products for the third quarter of 2013, compared to 31.3% and 68.7%, respectively, for the same period of 2012. Average sales prices per square meter for color cartons and flexo cartons were $0.41 and $0.40, respectively, for the third quarter of 2013, as compared to $0.41 and $0.38, respectively, for the same period 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 22.5% and 24.6%, respectively, of revenues of paper cartons and other paper products for the third quarter of 2013, as compared to 23.6% and 36.4%, respectively, for the same period of 2012.

Gross profit decreased by $0.6 million, or 10.8%, to $5.4 million for the third quarter of 2013 from $6.0 million for the same period of 2012. Gross margin decreased by approximately 4.8 points to 13.4% for the third quarter of 2013 from 18.2% for the same period of 2012.

Selling expenses increased by approximately $0.5 million, or 37.8%, to $1.9 million for the third quarter of 2013 from $1.4 million for the same period of 2012. The increase was mainly related to increase in freight expenses and increase in marketing expenses related to the paper mill in 2013.  As a percentage of revenues, selling expenses for the third quarter of 2013 increased to 4.8% from 4.2% for the same period of 2012.

General and administrative expenses decreased by $ 0.1 million, or 5.3%, to $2.8 million for the third quarter of 2013 from $2.9 million for the same period of 2012. This decrease was mainly related to the decline in office expenses.  As a percentage of revenues, general and administrative expenses for the third quarter of 2013 decreased to 7.0% from 8.9% for the same period of 2012.

Income tax expense decreased to $0.2 million for the third quarter of 2013 compared to $0.4 million for the same period of 2012. The decrease in income tax expense was mainly attributable to the decrease in income before income tax expense and non controlling interest.

Net income attributable to the Company's stockholders decreased by $0.9 million, or 60.7%, to approximately $0.5 million for the third quarter of 2013 from $1.4 million for the same period of 2012. Basic and diluted earnings per share were $0.01 for the third quarter of 2013, as compared to $0.04 for the same period of 2012.

Nine Months Ended September 30, 2013 Results

 

Sales Analysis (Millions)

Nine  Months
Ended
September 30,
2013

Nine  Months
Ended
September 30,
2012




Revenues– Paper Cartons (millions)

$94.0

$98.2

Revenues– Raw Paper (millions)

$6.5

NA

Color Cartons (% of paper cartons revenues)

29.0%

29.7%

Flexo Cartons (% of paper cartons revenues)

71.0%

70.3%

Paper Cartons Sales Volume (M sq meters)

237.3

249.0

Raw paper Sales Volume ('000 tons)

18.3

NA

Color Cartons  (avg price per sq meter)

$0.40

$0.42

Flexo Cartons (avg price per sq meter)

$0.39

$0.38

Raw Paper (avg price per ton)

$357

NA

 

Summary Results (Millions)

 

Nine Months
Ended
September 30,
2013

 

Nine Months
Ended
September 30,
2012




Revenues

$100.5

$98.2

Gross Profit

$15.5

$17.3

Gross Margin (%)

15.4%

17.6%

Operating Expenses

$12.7

$11.8

Operating Income

$2.8

$5.5

Operating Margin (%)

2.8%

5.6%

Net Income attributable to stockholders

$2.2

$4.6

EPS Basic & Diluted

$0.06

$0.12

Wtd Avg Shares Outstanding (millions)

38.8

38.8

Total revenues for the nine months ended September 30, 2013 increased by $2.3 million, or 2.4% to $100.5 million from $98.2 million for the same period of 2012. Revenues of paper cartons and other paper products decreased by $4.2 million, or 4.3%, to $94 million for the nine months ended September 30, 2013 from $98.2 million for the same period of last year. Our paper mill went into production in June 2013 and contributed $6.5 million, or 6.5% of total revenues with sales volume of 18.3 thousand tons and the average price of $357 per ton. The decrease in revenues of paper cartons was a result of continued challenges in domestic and foreign economic environment that led to 4.7% decline in sales volume of paper cartons to 237.3 million square meters for the nine months ended September 30, 2013 from 249 million square meters for the same period of last year.

Color cartons and flexo cartons accounted for 29.0% and 71.0% of revenues of paper cartons and other paper products, respectively, for the nine months ended September 30, 2013, as compared to 29.7% and 70.3%, respectively, for the same period of 2012. Average sales prices per square meter for color cartons and flexo cartons were $0.40 and $0.39, respectively, for the nine months ended September 30, 2013, as compared to $0.42 and $0.38, respectively, for the same period 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 24.9% and 26.0%, respectively, of revenues of paper cartons and other paper products for the nine months ended September 30, 2013, as compared to 26.1% and 32.8% respectively, for the same period of 2012.

Gross profit decreased by $1.8 million, or 10.6%, to $15.5 million for the nine months ended September 30, 2013 from $17.3 million for the same period of 2012. Gross margin dropped by approximately 2.2 points to 15.4% for the nine months ended September 30, 2013 from 17.6% for the same period of 2012.

Selling expenses increased by $0.1 million, or 4.3%, to $4.1 million for the nine months ended September 30, 2013 from $4.0 million for the same period of 2012. The increase was mainly due to increased marketing expenses at our paper mill in 2013. As a percentage of revenues, selling expenses for the nine months ended September 30, 2013 increased to 4.1% from 4.0% for the same period of 2012.

General and administrative expenses increased by $ 0.8 million, or 9.4%, to $8.6 million for the nine months ended September 30, 2013 from $7.8 million for the same period of 2012. This increase was mainly due to the increase in R&D expenses.  As a percentage of revenues, general and administrative expenses for the nine months ended September 30, 2013 increased to 8.5% from 8.0% for the same period of 2012.

Income tax expense decreased to $0.7 million for the nine months ended September 30, 2013 from $1.0 million for the same period of 2012. The decrease in income tax expense was mainly attributable to the decrease in income before income tax expense and non controlling interest.

Net income attributable to the Company's common stockholders decreased by $2.4 million, or 52.5%, to $2.2 million for the nine months ended September 30, 2013, from $4.6 million for the same period of 2012. Basic and diluted earnings per share were $0.06 for the nine months ended September 30, 2013, as compared to $0.12 for the same period of 2012.

Financial Condition

As of September 30, 2013, the Company had cash and cash equivalents of $6.2 million and restricted cash of $14.3 million. Shareholders' equity was $109.8 million, compared to $105.0 million at December 31, 2012. Net cash used in operating activities was $8.8 million for the nine months ended September 30, 2013, as compared to net cash provided by operating activities of $22.0 million for the same period of 2012. This was attributable to net income of $2.1 million, adjusted by depreciation and amortization expenses of $4.3 million, and a net decrease in cash from working capital items of $15.2 million. Net cash used in investing activities was $3.6 million for the nine months ended September 30, 2013, as compared to $17.8 million for the same period of 2012. The $3.6 million was used for purchases of property, plant and equipment and prepayment for construction, primarily related to machinery purchases and plant construction of Shuangsheng paper mill which was completed in June 2013. Net cash provided by financing activities was $6.4 million for the nine months ended September 30, 2013, as compared to $6.9 million net cash used in financing activities for the same period of 2012. During the third quarter of 2013, we received loan proceeds amounting to $6.4 million.

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 raw 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:  cindy.hu@cnpti.com                                                               
Website: http://www.cnpti.com                                    

Investor Relations Contact:
Weitian Group LLC  
Tina Xiao
Tel: +1-917-609-0333
Email: tina.xiao@weitian-ir.com 
Website: http://www.weitian-ir.com    

CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in US$)






September 30,



December 31,

ASSETS 


2013


2012

     Current assets


(Unaudited)



     Cash and cash equivalents


$6,168,747


$11,903,937

     Restricted cash


14,261,516


22,615,099

     Accounts and notes receivable, net


39,718,512


33,203,457

     Inventories


21,063,833


15,543,213

     Prepayments and other receivables


2,368,740


955,953

     Deductible value added tax payable


3,731,189


-

     Amount due from related parties


203,241


207,112

     Total current assets


87,515,778


84,428,771






     Non-current assets





     Property, plant and equipment, net


68,653,916


70,184,832

     Land use right


11,974,476


11,881,160

     Customer relationships, net


-


74,766

     Deferred tax assets


1,059,542


403,121

     Goodwill


180,262


175,941

Total assets


$169,383,974


$167,148,591






LIABILITIES AND EQUITY





     Current liabilities





     Accounts and notes payable


$32,170,878


$45,246,615

     Amounts due to related party


1,113,761


269,505

     Accrued expenses and other payables


4,753,965


2,310,270

     Taxes payable


2,168,336


1,360,386

     Short-term loans


10,004,000


3,500,000

     Current portion of long-term borrowing


9,000,000


4,500,000

     Total current liabilities


59,210,940


57,186,776






     Non-current liabilities





     Long-term loans


-


4,500,000

     Deferred tax liabilities


-


18,691

     Total liabilities


59,210,940


61,705,467






Commitment and contingencies 





Equity





Stockholders' equity





Common stock (US$0.001 par value, 190,000,000 shares authorized,
39,456,311 shares issued both at September 30, 2013 and December 31,
2012,  38,790,811 outstanding both at September 30,2013 and December
31, 2012)


39,456


39,456

Treasury stock (665,500 shares both at September 30,2013 and December 31, 2012)


(729,444)


(729,444)

Additional paid-in capital


43,765,243


43,765,243

Appropriated retained earnings


6,997,530


6,997,530

Unappropriated retained earnings


48,025,166


45,859,324

Accumulated other comprehensive income


11,728,293


9,101,639

Total equity for stockholders of China Shengda  Packaging


109,826,244


105,033,748

Noncontrolling interest


346,790


409,376

    Total equity


110,173,034


105,443,124

Total liabilities and equity


$169,383,974


$167,148,591

























CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Amounts in US$)












Three months ended September 30,


Nine months ended September 30,



2013


2012


2013


2012



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)

Revenues


$39,929,058


$33,033,566


$100,509,307


$98,151,414

Cost of goods sold


34,564,105


27,019,968


85,028,553


80,827,790

Gross profit


5,364,953


6,013,598


15,480,754


17,323,624

Operating expenses









     Selling expenses


1,901,019


1,379,774


4,130,936


3,961,498

     General and administrative expenses


2,784,893


2,940,979


8,581,080


7,847,277



4,685,912


4,320,753


12,712,016


11,808,775

Other income (expenses)









     Interest income


151,792


118,520


356,340


298,716

     Interest expense


(248,127)


(115,577)


(562,348)


(487,640)

     Subsidy income


4,302


46,309


327,876


263,714

     Other


174,645


(16,878)


212,583


7,142



82,612


32,374


334,451


81,932

Non-operating expense









     Non-operating expense


98,120


-


294,925


-



98,120


-


294,925


-

Income before income tax expense and noncontrolling

interest


663,533


1,725,219


2,808,264


5,596,781










Income tax expense


161,221


365,352


704,277


1,044,868

Net income


502,312


1,359,867


2,103,987


4,551,913

Net loss attributable to noncontrolling interest


33,077


1,663


61,855


4,855

Net income attributable to company's common stockholders


$535,389


$1,361,530


$2,165,842


$4,556,768










Basic and diluted earnings per share


$0.01


$0.04


$0.06


$0.12

Weighted-average number of shares outstanding - basic and diluted


38,790,811


38,790,811


38,790,811


38,790,811










Comprehensive income:









Net income


502,312


1,359,867


2,103,987


4,551,913

     Foreign currency translation adjustment


541,354


-164,829


2,625,923


548,508

Comprehensive income


1,043,666


1,195,038


4,729,910


5,100,421

Comprehensive loss attributable to noncontrolling interest




1,800


62,586


5,195

33,515



$1,077,181


$1,196,838


$4,792,496


$5,105,616










 

 

CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in US$)












 Nine Months Ended September 30,



2013


2012



(Unaudited)


(Unaudited)

Cash flows from operating activities





Net income


$2,103,987


$4,551,913

Adjustments to reconcile net income to net cash provided   by operating activities:





    Depreciation and amortization expenses


4,301,872


3,333,527

    Deferred tax


(657,893)


(40,572)

    Loss from disposal of property, plant and equipment


90,614


-

Change in operating assets and liabilities:





    Restricted cash


8,804,882


(3,426,845)

    Accounts and notes receivable


(5,615,309)


1,345,391

    Inventories


(5,078,848)


3,556,059

    Prepayments and other receivables


(1,379,429)


(436,701)

    Accounts and notes payable


(14,016,566)


12,824,684

    Amount due from(to) related party


836,702


544,609

    Accrued expenses and other payables


2,055,666


1,718,696

    Tax payables


(205,277)


(2,002,434)

    Net cash (used in) provided by operating activities


(8,759,599)


21,968,327

Cash flows from investing activities





    Purchase of property, plant and equipment


(3,685,181)


(14,619,240)

    Prepayment paid for construction in progress


-


(3,150,000)

    Proceeds from disposal of property, plant and
    equipment


59,676


-

    Net cash used in investing activities


(3,625,505)


(17,769,240)

Cash flows from financing activities





    Proceeds from short-term loan


6,428,000


6,662,447

    Proceeds from long-term loan


-


4,495,863

    Repayment of short-term loans


-


(13,301,664)

    Restricted cash


-


(4,993,263)

    Investment from noncontrolling interests


-


208,894

    Net cash provided by (used in) financing activities


6,428,000


(6,927,723)

    Effect of foreign currency exchange rate fluctuation on
    cash and cash equivalents


221,914


109,426

    Net changes in cash and cash equivalents


(5,735,190)


(2,619,210)

Cash and cash equivalents, beginning of period


11,903,937


19,294,089

Cash and cash equivalents, end of period


$6,168,747


$16,674,879

Cash paid during the period for:





Interest paid


$374,852


$475,204

Income taxes paid


$1,008,024


$885,290






































 

SOURCE China Shengda Packaging Group Inc.



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