Keyuan Petrochemicals Inc. Announces First Half 2012 Financial Results - First half 2012 revenue increased 24% YOY to approximately $367.8 million

- Gross profit in the second quarter of 2012 up 237% YOY

- Receives $95.1 million consumption tax refund in August, 2012

- Reaffirms FY 2012 revenue and production guidance of $880.0 million and 760,000 MT, respectively

NINGBO, China, Aug. 21, 2012 /PRNewswire-Asia-FirstCall/ -- Keyuan Petrochemicals Inc. (OTCQB: KEYP), ("Keyuan" or "the Company"), an independent manufacturer and supplier of various petrochemical products in China, today announced the Company's financial results for the six months ended June 30, 2012.

"We are pleased that our first half 2012 revenue benefitted from solid customer demand and the improvement of production efficiency," declared Mr. Chunfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals Inc. "Although our margins were negatively impacted by extreme fluctuations in international oil prices and the industry environment, I believe Keyuan's core earnings potential will continue to improve as a result of our engagement with research institutes, our initiatives on major projects, and our SBS facility ramping into commercial production."

Financial Summary


Q2 2012

Q2 2011

Chg.

Net Revenues

$184.4 M

$150.9 M

22%

Gross Profit

6.4M

1.9M

237%

Net Income (loss) (a)

1.1M

(2. 1M)

152%

EPS (Diluted)

0.02

(0.04)

150%

Diluted Shares O/S

63.0M

57.6M

-

(a) Net Income (loss) attributable to KEYP common stockholders.

First Half 2012 Financial Results

Six months ended June 30, 2012

1H 2012

1H 2011

Chg.

Net Revenues

$367.8M

$297.7 M

24%

Gross Profit

$15.9M

$14.5M

9.7%

Net Income (loss) (a)

$2.9M

$2.8M

3.6%

EPS (Diluted)

$0.05

$0.05

-

Diluted Shares O/S

63.0M

57.6M

-

(a)     Net Income attributable to KEYP common stockholders.

Sales for the six months ended June 30, 2012 were approximately $367.8 million compared to sales of $297.7 million for the six months ended June 30, 2011. The Company sold 326,961 metric tons (MT) of petrochemical products, an increase of 14.9% from 281,595 MT of products sold in the corresponding period in 2011. The average sales price per metric ton was $1,125 during the first half of 2012, a 7.5% increase from $1,046 per metric ton in the first half of 2011.

Cost of goods sold was $351.9 million in the six months ended June 30, 2012 compared to $283.1million in the first half of 2011, with a gross profit of $15.9 million, or 4.3%, in the first half of 2012, compared to a gross profit of $14.5 million, or 4.9%, in the same period a year ago. The main reason for the decrease in the gross margin is due to delays in passing raw material price increases onto our customers.

Operating expenses for the first six months of 2012 were approximately $5.9 million, consisting of $0.6 million in selling expenses and $5.3 million in general and administrative expenses compared to approximately $0.8 million and $7.8 million, respectively, in the first half of 2011. The decrease in expense was due to decreases in share-based compensation and various legal, consulting and internal expenses related to the independent investigation.  

Net income attributable to common shareholders for the six months ended June 30, 2012 was approximately $2.9 million, as compared to net income of approximately $2.8 million in the same period in 2011, an increase of $0.1 million. The diluted net income per share of $0.05 for the six months ended June 30, 2012 was relatively unchanged from the same period in 2011.

Full Year 2012 Guidance

The profits of most enterprises in Ningbo declined in the first half of 2012 due to the complex and volatile global economic environment and the slower growth in the Chinese economy. Management has adjusted our guidance and forecasts $880 million of revenues, $20 million of net income and 760,000 MT of production for 2012.

Business updates

In the first six months of 2012, the extreme fluctuation in international oil prices has caused a significant negative impact on the petrochemical industry and most petrochemical companies including Keyuan. To address this issue, Keyuan engaged research institutes in Shanghai and in Zhejiang province to study the possibility and feasibility of diversifying its products, developing high value-added products and improving the Company's production efficiency to create more stable long-term development, and to optimize product structures, which will effectively reduce the adverse effects of oil price fluctuations and the outside environment.

On June 15, 2012, Ningbo Keyuan and Ningbo Keyuan Petrochemicals established a subsidiary in the People's Republic of China ("PRC"), Ningbo Keyuan Synthetic Rubbers Co., Limited ("Keyuan Synthetic Rubbers"), which is engaged in the sales and marketing of various petrochemical products, specifically synthetic rubbers.

Other Events

On August 15, 2012, the Company received a consumption tax refund of $95,124,967 as a result of new consumption tax policies of the PRC issued in October 2011.  The Company anticipates that consumption tax claims procedures will be more efficient and less time-consuming in the future.

About Keyuan Petrochemicals, Inc.

Keyuan Petrochemicals, Inc., established in 2007 and operating through its wholly-owned subsidiary, Keyuan Plastics, Co. Ltd., is located in Ningbo, China and is a leading independent manufacturer and supplier of various petrochemical products. Having commenced production in October 2010, Keyuan's operations include an annual petrochemical manufacturing design capacity of 720,000 MT for a variety of petrochemical products, with facilities for the storage and loading of raw materials and finished goods, and a technology that supports the manufacturing process with low raw material costs and high utilization and yields. In order to meet increasing market demand, Keyuan plans to expand its manufacturing capacity to include a SBS production facility which was completed in September 2011. One SBS production line began commercial production in December 2011 and the second line began commercial production in August, 2012.  The Company plans to add additional storage capacity, a raw material pre-treatment facility, an asphalt production facility, and an ABS production facility.

Cautionary Statement Regarding Forward-Looking Information

This press release may contain certain "forward-looking statements" relating to the business of Keyuan Petrochemicals, Inc., and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding the impact of the proceeds from the private placement on the Company's short term business and operations, the general ability of the Company to achieve its commercial objectives, including the ability of the Company to sustain growth; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf months are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

For more information, please contact:

Angel Gu
Keyuan Petrochemicals, Inc
Phone: +0086-1-381-986-4827
Email: angelgu@keyuanpetrochemicals.com
Web: www.keyuanpetrochemicals.com

 

KEYUAN PETROCHEMICALS, INC. AND SUBSIDIAIRES

CONDENSED CONSOLIDATED BALANCE SHEETS








June 30,


December 31,



2012


2011





 (Unaudited)

ASSETS





Current assets:





Cash 

$

9,879,169

$

7,325,017

Pledged bank deposits


239,816,494


156,318,066

Bills receivable


3,309,663


1,574,000

Accounts receivable


4,014,076


2,226,288

Inventories


73,048,249


38,945,968

Prepayments to suppliers


44,507,626


15,781,294

Consumption tax refund receivable


107,023,606


55,809,560

Amounts due from related parties


39,625


39,350

Other current assets


60,646,615


45,978,428

Deferred income tax assets


37,609


37,348











Total current assets


542,322,732


324,035,319






Property, plant and equipment, net


209,768,917


190,867,621

Intangible assets, net


931,847


978,503

Land use rights


10,920,476


11,068,762

VAT recoverable 


2,541,216


2,893,635






Total assets

$

766,485,188

$

529,843,840






LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities:





Short-term bank borrowings 

$

393,534,612

$

225,969,421

Bills payable


111,267,000


63,550,250

Current portion of long-term bank borrowings


15,850,000


15,740,000

Accounts payable 


79,936,476


97,588,137

Advances from customers


41,202,535


7,821,623

Accrued expenses and other payables


30,254,525


30,287,946

Income taxes payable


1,224,165


186,326

Dividends payable


2,381,759


2,381,759

Amounts due to related parties


768,313


621,077






Total liabilities, all current


676,419,385


444,146,539











Series B convertible preferred stock:





Par value: $0.001; Authorized: 8,000,000 shares





6% cumulative dividend with liquidation preference





over common stock





Issued and outstanding: 5,333,340 shares,





liquidation preference of $ 20,000,000


16,451,552


16,451,552






Commitments and contingencies


-


-











Stockholders' equity:





Common stock:





Par value:$0.001; Authorized: 100,000,000 shares;





Issued and outstanding: 57,646,160 shares as at June 30, 2012 and December 31,2011


57,646


57,646

Additional paid-in capital


49,951,346


49,198,278

Statutory reserve


3,744,304


3,744,304

Accumulated other comprehensive income


7,253,902


6,545,811

Retained earnings


12,607,053


9,699,710






Total stockholders' equity


73,614,251


69,245,749






Total liabilities and stockholders' equity

$

766,485,188

$

529,843,840






 

KEYUAN PETROCHEMICALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)







Three Months Ended 

Six Months Ended 


                 June 30,

June 30,


2012

2011

2012

2011

Sales





   External parties

$184,425,717

$115,281,945

$367,750,405

$239,436,744

   Related parties

0

35,607,658

0

58,217,477






Total Sales

184,425,717

150,889,603

367,750,405

297,654,221






Cost of sales





   External parties

178,005,456

111,055,933

351,857,165

224,870,131

   Related parties

0

37,977,326

0

58,276,685






Total Cost of sales

178,005,456

149,033,259

351,857,165

283,146,816






Gross profit

6,420,261

1,856,344

15,893,240

14,507,405











Operating expenses





   Selling expenses

388,217

215,548

641,123

754,680

General and administrative expenses

2,656,620

4,529,744

5,266,815

7,764,824






Total operating expenses

3,044,837

4,745,292

5,907,938

8,519,504






Income (loss) from operations

3,375,424

(2,888,948)

9,985,302

5,987,901






Other income (expense):





Interest income 

1,882,812

781,941

2,822,046

1,688,885

       Interest expense

(2,930,281)

(2,638,734)

(7,308,982)

(5,835,364)

Foreign exchange (loss) gain, net

(542,352)

3,200,356

(364,518)

2,052,713

       Liquidated damages expense

-

(1,300,730)

-

(1,300,730)

       Other income (expense ), net

147,022

1,689,404

(217,039)

3,716,178






Total other expense (income)

(1,442,799)

1,732,237

(5,068,493)

321,682






Income (loss) before income taxes

1,932,625

(1,156,711)

4,916,809

6,309,583






Income tax expense

870,277

665,828

2,009,469

2,917,979






Net income (loss) attributable to Keyuan





   Petrochemicals Inc. stockholders

1,062,348

(1,822,539)

2,907,340

3,391,604
















Dividends to Series B convertible





    preferred stockholders

-

306,247

-

602,507






Net income (loss) attributable to Keyuan





   Petrochemicals Inc. common stockholders

$1,062,348

($2,128,786)

$2,907,340

$   2,789,097






Net income (loss) attributable to Keyuan





   Petrochemicals Inc. stockholders

$1,062,348

($1,822,539)

$2,907,340

$3,391,604






Other comprehensive income





Foreign currency translation adjustment

130,680

617,550

708,091

1,174,874






Comprehensive Income (loss) 

$1,193,028

($1,204,989)

$3,615,431

$   4,566,478






Earnings (loss)  per share:





Attributable to common stock:





- Basic

$0.02

($0.04)

$0.05

$0.05

- Diluted

$0.02

($0.04)

$0.05

$0.05






Weighted average number of shares of





 common stock used in calculation





Basic

57,646,160

57,579,239

57,646,160

57,578,896

Diluted

62,979,500

57,579,239

62,979,500

63,836,892






KEYUAN PETROCHEMICALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)










Six Months Ended June 30,




2012


2011




(Unaudited)


(Unaudited)

Cash flows from operating activities:






Net income


$

2,907,340

$

3,391,604

Adjustments to reconcile net income to net cash






(Used in) provided by operating activities:






 Loss on disposal of property and equipment




3,504

 Depreciation



5,452,134


4,671,566

 Amortization



53,548


51,675

 Land use rights amortization



225,868


217,999

 Share-based compensation expense



819,496


1,285,185

Changes in operating assets and liabilities:






Bills receivable



(1,726,404)


5,665,046

Account receivable



2,244,109


Inventories



(33,864,254)


(14,517,420)

Prepayments to suppliers



(25,882,018)


11,118,823

Consumption tax refund receivable



(50,875,322)


5,455,515

Other current assets



(16,565,560)


(23,036,081)

Accounts payable 



(18,462,125)


44,000,832

Advances from customers



29,341,763


4,320,196

Income taxes payable



879,675


(9,427,659)

Accrued expenses and other payables



(1,483,151)


1,500,872







Net cash(used in) provided by operating activities



(106,934,901)


34,701,657







Cash flows from investing activities:






Proceeds from property disposal of property and equipment




10,512

Purchase of property, plant and equipment,



(21,295,703)


(11,574,245)







Net cash used in investing activities



(21,295,703)


(11,563,733)







Cash flows from financing activities:






Pledged bank deposits used for bank borrowings



(82,489,175)


(52,211,458)

Proceeds from short-term bank borrowings



457,866,240


74,477,809

Repayment of short-term bank borrowings



(291,149,318)


(45,167,450)

Proceeds from bills payable



111,379,320


51,215,295

Repayment of bills payable



(64,058,975)


(60,784,670)

Repayments of long-term bank borrowings




(13,014,350)

Short-term financing from related parties




13,144,234

Short-term financing to related parties




(13,144,234)

Repayment to Ningbo Litong




(95,094)

Proceeds from warrant exercise




7,332

Dividends paid




(1,396,964)







Net cash provided by (used in) financing activities



131,548,092


(46,969,550)







Effect of foreign currency exchange rate changes on cash



(763,336)


278,395







Net increase (decrease) in cash



2,554,152


(23,553,231)







Cash at beginning of the period



7,325,017


29,336,241







Cash at end of the period


$

9,879,169

$

5,783,010







Supplemental disclosure of cash flow information:






Income taxes paid


$

1,028,792

$

12,345,638

Interest paid, net of capitalized interest


$

588,578

$

5,835,363

Non-cash financing activities:






Payable for purchase of property, plant and equipment


$

4,433,893

$

24,433,051







 

SOURCE Keyuan Petrochemicals, Inc.



RELATED LINKS
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