China Shengda Packaging Group Inc. Reports First Quarter 2015 Financial Results

HANGZHOU, China, May 15, 2015 /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 first quarter ended March 31, 2015. 

Mr. Daliang Teng, Chief Executive Officer of Shengda, commented, "While Q1 historically had been a light quarter for our business due to the Chinese New Year, we managed to grow our overall revenues by 17.5%  year-over-year mainly because our subsidiaries Shengda Zhongtian and Shengda Concept started to contribute in the first quarter of 2015. Gross margin increased by 40 basis points as we further cut losses from our corrugating medium paper business while operating loss also reduced year-over-year as we kept our expenses under tight control."  

Mr. Teng continued, "Despite continuing macro weakness in the near future, we believe our further vertical integration and geographical expansion, combined with our stringent cost control, will allow us to continue to grow our business and improve our market position."

First Quarter 2015 Financial Highlights:

• Overall revenues increased by 17.5% to $37.9 million for the first quarter of 2015 mainly driven by increase in sales volume of paper cartons and other paper products mainly because Shengda Zhongtian and Shengda Concept commenced production in the first quarter of 2015.
• Overall gross margin improved by 40 basis points to 13.2% for the first quarter of 2015 from 12.8% for the same period of last year.
• Operating loss decreased to $0.1 million for the first quarter of 2015 from $0.6 million for the same period of last year as we continued our tight control over operating expenses while maintaining growth in revenues. 
• Net loss attributable to the Company's stockholders decreased by $0.4 million, or 88.2%, to approximately $0.1 million for the first quarter of 2015 from $0.5 million for the same period of last year.
• Basic and diluted loss per share were $0.00 for the first quarter of 2015, compared with $0.01 for the same period of last year.  

Three Months Ended March 31, 2015 Results

Total revenues for the first quarter of 2015 increased by $5.6 million, or 17.5%, to $37.9 million from $32.3 million for the same period of last year, primarily driven by increased sales volume of paper cartons and other paper products.

Revenues of paper cartons and other paper products increased by $4.9 million, or 18.6%, to $31.0 million for the first quarter of 2015 from $26.1 million for the same period of last year. Sales volume of paper cartons increased by 19.7 million square meters, or 29%, to 87.6 million square meters for the first quarter of 2015 from 67.9 million square meters for the same period of last year while the average price of paper cartons and other paper products decreased to $0.36 per square meter for the first quarter of 2015 from $0.38 per square meter for the same period of last year. Color and flexo cartons accounted for 22.1% and 59.6% of total revenues for the first quarter of 2015, compared to 25.3% and 55.6%, respectively, for the same period of last year. Average sales prices per square meter for color and flexo cartons were approximately $0.40 and $0.34, respectively, for the first quarter of 2015, compared to approximately $0.39 and $0.38, respectively, for the same period of last year. 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 19.6% and 21.8%, respectively, of total revenues for the first quarter of 2015, compared to 22.1% and 21.2%, respectively, for the same period of last year.

Revenues of corrugating medium paper decreased by $0.8 million, or 9.1%, to $8.5 million for the first quarter of 2015, from $9.3 million for the same period of last year. The decrease was mainly resulted from declines in both sales volume and average selling price. Sales volume and average selling price of corrugating medium paper was approximately 24.3 thousand tons and $349 per ton, respectively, for the first quarter of 2015, compared to 25.4 thousand tons and $368 per ton, respectively, for the same period of last year.

Overall gross profit increased by $0.9 million, or $ 21.1%, to $5.0 million for the first quarter of 2015 from $4.1 million for the same period of last year, as a result of increase in revenues of our paper cartons and other paper products business as well as decline in gross loss of the corrugating medium paper business. Gross profit of paper cartons and other paper products increased by $0.4 million, or 7.2%, to $5.8 million for the first quarter of 2015 from $5.4 million for the same period of last year. Gross profit of color and flexo cartons were $1.7 million and $4.1 million, respectively, for the first quarter of 2015, compared to $1.7 million and $3.7 million, respectively, for the same period of last year. Gross loss of corrugating medium paper was $0.8 million for the first quarter of 2015, down from $1.3 million for the same period of last year. Overall gross margin improved by 40 basis points to 13.2% for the first quarter of 2015 from 12.8% for the same period of last year. Gross (loss) margins for paper cartons and other paper products and corrugating medium paper were 18.8% and negative 9.5%, respectively, for the first quarter of 2015, compared to 20.7% and negative 13.8%, respectively, for the same period of last year.

Selling expenses were $1.9 million for the first quarter of 2015, essentially unchanged from the same period of last year. As a percentage of revenues, selling expenses decreased to 4.9% for the first quarter of 2015 from 5.7% for the same period of last year.

General and administrative expenses increased by $0.4 million, or 13.2%, to $3.2 million for the first quarter of 2015 from $2.8 million for the same period of last year. This increase was mainly due to the increase in staff costs, which include salary, benefits, social insurance and other relevant staff expenses.  As a percentage of revenues, general and administrative expenses decreased to 8.5% for the first quarter of 2015 from 8.8% for the same period of last year.

As a result of the forgoing, operating loss was approximately $0.1 million for the first quarter of 2015, compared to $0.6 million for the same period of last year. Operating loss margin was 0.2% or the first quarter of 2015, compared to 1.7% for the same period of last year.

Net loss attributable to the Company's common stockholders decreased by approximately $0.4 million, or 88.2%, to $0.1 million for the first quarter of 2015, from $0.5 million for the same period of last year. Basic and diluted loss per share were $0.00 for the first quarter of 2015, compared to $0.01 for the same period of last year.

Financial Condition

As of March 31, 2015, the Company had cash and cash equivalents of $8.0 million and restricted cash of $12.9 million, compared to $10.9 million and $13.8 million, respectively, at December 31, 2014. Working capital was $25.2 million as of March 31, 2015, compared to $30.7 million at December 31, 2014. Total equity for stockholders of Shengda was $113.4 million as of March 31, 2015, compared to $113.0 million at December 31, 2014.

Net cash used in operating activities was $0.8 million for the first quarter of 2015, compared to net cash provided by operating activities of $3.7 million for the same period of last year. This was attributable to net loss of $0.1 million, adjusted by depreciation and amortization expenses of $1.8 million, and a net decrease in cash from accounts and notes receivable of $2.0 million and a net decrease in cash from other working capital items of $0.5 million.

Net cash used in investing activities was $2.1 million for the first quarter of 2015, compared to $1.8 million for the same period of last year. The $2.1 million was mainly used for purchases of property, plant and equipment at our subsidiaries Shengda Concept and Shengda Zhongtian.

Net cash provided by financing activities was nil for the first quarter of 2015, compared to $1.0 million for the same period of last year. During the three months ended March 31, 2015, we did not receive proceeds from loans or repay loans.  

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 corrugating medium 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 within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. 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 expand to new markets, the ability to grow business through vertical integration and geographical expansion, 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, current or future volatility in the credit market and future market 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: [email protected]                                                             
Website: http://www.cnpti.com                                              

Investor Relations Contact:

Weitian Group LLC  
Tina Xiao
Tel: +1-917-609-0333
Email: [email protected] 

SOURCE China Shengda Packaging Group Inc.