General Steel Announces Preliminary Sales Data and Provides Operational Update for the First Half of 2012
First Six Months of 2012 Revenues Total approximately US$1.4 Billion on Production Volume of approximately 2.4 Million Metric Tons
BEIJING, Sept. 27, 2012 /PRNewswire-FirstCall/ -- General Steel Holdings, Inc. ("General Steel" or the "Company") (NYSE: GSI), one of China's leading non-state-owned producers of steel products and aggregators of domestic steel, today announced select preliminary financial results for the first half of 2012 and provided an update on its operations and strategic initiatives. For the first half of 2012, General Steel expects to report revenues of approximately US$1.4 billion and production volume of approximately 2.4 million metric tons.
"While the nationwide steel market has slowed, demand in our primary target market of Western China has remained stable, supported by large-scale, government-sponsored housing and infrastructure investment projects," said Mr. Henry Yu, General Steel Chairman and Chief Executive Officer. "Our sales and volume momentum remains strong and continues to grow as Shaanxi Province and the nearby areas initiate new infrastructure projects that have been recently approved by the National Development and Reform Commission. Situated in Shaanxi, we believe our Longmen JV presents a highly capable, geographically desirable partner for these upcoming projects, and we believe we are well positioned to capture new growth opportunities as we extend our presence in this rapidly developing region. Our expanded Unified Management Agreement with Shaanxi Steel and Shaanxi Coal, is creating additional advantages by improving our raw material procurement and direct sales capabilities and further strengthening our market position."
"Expanding our direct sales channel and securing new contracts have been among our primary areas of focus. In the first half of the year, we have increased cooperation with large state-owned-enterprises through direct sales contracts. We are simultaneously maintaining tight expense controls, scaling production at Longmen JV, improving our product-mix and achieving additional operating efficiencies to mitigate market challenges and pricing pressure. While the cost of both iron ore and other raw materials for steel products remains volatile, we expect to offset pricing fluctuations based on our strategic cost reduction and efficiency improvement initiatives. Under our benchmarking program, we are improving our raw materials procurement capabilities, reducing transportation costs for securing coke, and upgrading equipment with state-of-the-art technology," Mr. Yu concluded.
"While we focus on implementing our strategic operating efficiency initiatives, we continue upholding the highest standards of internal controls and accounting policies," said John Chen, Chief Financial Officer of General Steel.
"In August, we successfully completed restatement of 2009, 2010 and first quarter 2011 financial results. We view the completion of these restatements as an important step forward for our Company. We are now focused on completing the audit process and SEC filings for our outstanding financial statements. We look forward to completing this process and returning to a regular financial reporting schedule as soon as possible," stated Mr. Chen.
Recent Operational Highlights
- Completed the first stage of a series of benchmarking programs, which have resulted in efficiency improvements and cost reduction at Longmen JV.
- Initiated construction on a state-of-the-art, 900,000 metric ton seismic-grade rebar production line at Longmen JV. The production line incorporates cutting-edge technology that is expected to reduce rebar production costs substantially. The added capacity will also improve margins and enable the Company to better address demand for seismic-grade rebar in Western China.
- Currently Longmen JV is sourcing coke from a 5 million metric ton coke plant adjacent to Longmen JV, which was built by Shaanxi Coal and Chemical Industry Group Co., Ltd., one of the parties in the unified management agreement. General Steel expects the construction of a conveyor belt that will feed the coke directly to its Longmen JV to be completed in October and further reduce transportation costs.
Update on Filings
On August 30, 2012, General Steel completed filing its amended annual report on Form 10-K/A for the year ended December 31, 2010 and amended quarterly reports on Form 10-Q/A for the quarters ended June 30, 2010, September 30, 2010 and March 31, 2011 with the U.S. Securities and Exchange Commission ("SEC").
With these restatements complete, the Company is working diligently with its independent registered public accountant, PricewaterhouseCoopers Zhong Tian CPAs Limited Company ("PwC") on the audit process for its outstanding financial statements for 2011. Currently, the Company is finalizing its quarterly report on Form 10-Q for the period ended June 30, 2011, while simultaneously working on the quarterly report on Form 10-Q for the period ended September 30, 2011 and its Annual Report on Form 10-K for the year ended December 31, 2011. These reports are expected to be released in a sequential order.
Following the completion of these filings, General Steel will file its quarterly reports with the SEC on Form 10-Q for the periods ended March 31 and June 30, 2012 as soon as possible.
About General Steel Holdings, Inc.
General Steel Holdings, Inc., (NYSE: GSI), headquartered in Beijing, China, operates a diverse portfolio of Chinese steel companies. With 7 million metric tons of crude steel production capacity under management, its companies serve various industries and produce a variety of steel products including rebar, high-speed wire and spiral-weld pipe. General Steel Holdings, Inc. has steel operations in Shaanxi and Guangdong provinces, Inner Mongolia Autonomous Region and Tianjin municipality. For more information, please visit www.gshi-steel.com.
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This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Actual results could differ materially from those projected in the forward-looking statements as a result of inaccurate assumptions or a number of risks and uncertainties. These risks and uncertainties are set forth in the Company's filings under the Securities Act of 1933 and the Securities Exchange Act of 1934 under "Risk Factors" and elsewhere, and include: (a) those risks and uncertainties related to general economic conditions in China, including regulatory factors that may affect such economic conditions; (b) whether the Company is able to manage its planned growth efficiently and operate profitable operations, including whether its management will be able to identify, hire, train, retain, motivate and manage required personnel or that management will be able to successfully manage and exploit existing and potential market opportunities; (c) whether the Company is able to generate sufficient revenues or obtain financing to sustain and grow its operations; (d) whether the Company is able to successfully fulfill our primary requirements for cash; and (e) other risks, including those disclosed in the Company's Form 10-K, filed with the SEC. Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.
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