China Shengda Packaging Group Inc. Reports Full Year 2012 Results

HANGZHOU, China, March 29, 2013 /PRNewswire-FirstCall/ -- China Shengda Packaging Group Inc. (NASDAQ: CPGI), a leading Chinese paper packaging manufacturer, today announced its financial results for the twelve months ended December 31, 2012.

"As our customers continued to face economic headwinds throughout the year in 2012, our overall sales volume declined slightly from 321.7 million square meters in 2011 to 317.4 million square meters in 2012. Our gross margin also declined from 20.7% in 2011 to 18.0% in 2012 due to increase in cost of raw materials. However, our revenues increased by 1.1% to $125.3 million from $124.0 million as we continued to improve our sales mix in favor of color cartons that carry higher margin and higher average sales price versus flexo cartons," said Mr. Daliang Teng, Chief Executive Officer of China Shengda Packaging Group.

FY 2012 Financial Highlights:

• Revenues increased by $1.3 million, or 1.1%, to $125.3 million for 2012 from $124.0 million for 2011.
• Gross profit decreased by $3.1 million, or 12.0%, to $22.6 million for 2012 from $25.7 million for 2011. Gross profit as a percentage of revenues was 18.0% for 2012, as compared to 20.7% for 2011.
• Net income applicable to common stockholders decreased by $4.0 million, or 42.2%, to $5.6 million for 2012 from $9.6 million for 2011.
• Diluted earnings per share were $0.14 for 2012 as compared to $0.25 for 2011.

Revenues for the full year of 2012 was $125.3 million, an increase of $1.3 million or 1.1% from $124.0 million for the full year of 2011, mainly due to increase in average sales price which increased by $0.01, or 2.5%, to $0.395 for 2012 from $0.385 for 2011. Sales volume decreased 4.4 million square meters, or 1.4%, to 317.4 million square meters from 321.7 million square meters for 2011. The decrease in sales volume was mainly the result of challenging macro environment.

Color cartons accounted for 28.7% of revenues and flexo cartons accounted for 71.3% of revenues for 2012, compared to 27.1% and 72.9% of revenues for 2011, respectively. Average sales prices per square meter for color cartons and flexo cartons were $0.42 and $0.39, respectively, for the year of 2012, as compared to $0.44 and $0.37, respectively, for the year of 2011.

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 23.2% and 30.1% of revenues, respectively.

Gross profit decreased by $3.1 million, or 12.0%, to $22.6 million for 2012, from $25.7 million for 2011. Gross profit as a percentage of revenues was 18.0% for 2012, as compared to 20.7% for 2011, mainly due to increase in raw material cost. Average cost of goods sold per square meter for 2012 was approximately $0.32, as compared to $0.30 for 2011.

Selling expenses increased by $0.4 million, or 8.7%, to $5.1 million for 2012, from $4.7 million for 2011. The increase in selling expenses was related to $0.1 million increase in staff costs and $0.3 million increase in freight expenses. As a percentage of revenues, selling expenses for 2012 increased to 4.1%, from 3.8% for 2011.

General and administrative expenses increased by $0.8 million, or 7.5%, to $11.0 million for 2012, from $10.2 million for 2011. This was mainly attributable to a $0.5 million increase in staff costs. As a percentage of revenues, general and administrative expenses for 2012 increased to 8.8%, as compared to 8.3% for 2011.

Net income attributable to common stockholders decreased by $4.0 million, or 42.2%, to $5.6 million or $ 0.14 per diluted share for 2012, from $9.6 million or $0.25 per diluted share for 2011.

Financial Condition

As of December 31, 2012, the Company had cash and cash equivalents of $11.9 million and restricted cash of $22.6 million. Shareholders' equity was $105.0 million, compared to $98.6 million as of December 31, 2011. Net cash provided by operating activities was $27.2 million for 2012, as compared to $4.8 million net cash used in operating activities for 2011. This was attributable to our net income of $5.6 million, adjusted by depreciation and amortization expenses of $4.5 million, and a net increase in cash from accounts and notes payable of 20.2 million, and a net decrease in cash from other working capital items of $3.1 million.

Net cash used in investing activities was $27.7 million for 2012, as compared to $9.6 million for 2011. The $27.7 million net cash used in investing activities during 2012 was mainly attributable to the purchases of property, plant and equipment for our paper mill, including machinery purchases of $15.6 million and plant construction of $11.2 million.

Net cash used in financing activities was $7.0 million for 2012, as compared to $3.0 million net cash used in financing activities for 2011. During 2012, the Company received $11.1 million in loan proceeds, repaid $13.3 million loans, and deposited restricted cash $5.0 million as collaterals for notes payable and 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 the design, manufacturing and sale of flexo-printed and color-printed corrugated paper cartons in a variety of sizes and strengths. It also manufactures corrugated paperboards, which are used for the production of its 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 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: 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]
Website: http://www.weitian-ir.com 

SOURCE China Shengda Packaging Group Inc.