HARBIN, China, Sept. 15, 2015 /PRNewswire/ -- China XD Plastics Company Limited (NASDAQ: CXDC) ("China XD Plastics" or the "Company"), one of China's leading specialty chemical companies engaged in the development, manufacture and sale of polymer composite materials primarily for automotive applications, today provided a business update and an adjustment to its full year financial guidance.
In the first half of 2015, the substantial slowdown in China's domestic growth has impeded the growth of its auto industry and China's entire auto supply chain, which has caused downward pricing pressure on the Company's products. Further, a change in the Company's overseas product mix has resulted in pricing pressure and margin contraction as compared to the year-ago period. In addition, the Company has experienced a delay in its payment collection with respect to a South Korean customer, which could impact its ability to meet its financial guidance. Accordingly, the Company has adjusted its full year financial guidance. The Company now expects full-year 2015 revenue to be in the $900 million to $1 billion range, and expects full-year net income to be in the $80 million to $100 million range. This financial forecast reflects the Company's business outlook for the remainder of fiscal 2015.
"We feel it is prudent to adjust guidance now in order to provide our shareholders with an update regarding our operational conditions and expectations in a timely and transparent way," said Jie Han, Chairman of the Board of Directors and Chief Executive Officer. "The primary cause for the revision is a likely reduction in business from a relatively new overseas customer attributable to payment collection issues. We view this as a one-time event and we are taking steps to resolve this matter."
"Our long term growth strategy remains intact. Our Phase 2 expansion in Dubai is on track for completion by the end of 2015, and we expect the new facility to fulfill orders from new customers in South Korea and Europe in early 2016. In addition, our Sichuan campus is on schedule to be operational in the first half of 2016. We are excited about the growth prospects of the Company and believe that our technological edge and market positioning will enable us to substantially grow revenues and market share in the years ahead."
The Company's adjustment of its full year financial guidance is principally based on the following two factors:
1) The Company has experienced a delay in its payment collection with respect to a South Korean customer. To better manage its financial risk, the Company implemented a one-time cease-supply to the customer for 60 days in accordance with its risk management policy while both parties actively negotiate the pricing and payment terms associated with the Company's high-end products; and,
2) The Company has experienced pricing and margin pressure from its domestic customers due to the continuing slowdown of China's auto sector and its upstream supply chain which has continued into the third quarter of 2015.
The Company estimates that approximately 89% of the revision to its full year 2015 net income guidance range is attributable to the overseas customer situation addressed above, while approximately 11% of the revision is attributable to China's macroeconomic environment. The Company believes that its current operations are sound and that its technological base and culture of innovation affords it the opportunity to expand into additional verticals.
About China XD Plastics Company Limited
China XD Plastics Company Limited, one of China's leading specialty chemical companies, through its wholly-owned subsidiaries, develops, manufactures and sells polymer composites materials, primarily for automotive applications. The Company's products are used in the exterior and interior trim and in the functional components of 27 automobile brands manufactured in China, including without limitation, Audi, BMW, Volkswagen, Buick, Mazda, and Toyota. The Company's wholly-owned research center is dedicated to the research and development of polymer composites materials and benefits from its cooperation with well-known scientists from prestigious universities in China. As of June 30, 2015, 339 of the Company's products have been certified for use by one or more of the automobile manufacturers in China. For more information please visit http://www.chinaxd.net.
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements which are based on the Company's current expectations and are subject to numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate.
Risks that may cause these forward-looking statements to be inaccurate include, among others:
- forecasted sales and income results for the fiscal year are subject to final results and may be adjusted or otherwise change after normal year-end accounting review;
- the Company's ability to collect payment from its customers in a timely manner, or further implementation of the cease-supply policy, may affect the financial performance of the Company;
- competitive pricing pressures or product mix shift to more advanced products may result in lower average selling prices, lower revenues and reduced gross margins;
- the prospect of the Company's Dubai facility, and the associated expansion into Middle East, Europe and other parts of Asia may affect the financial performance of the Company;
- the Company's ability to execute its growth strategy and the effectiveness of its marketing strategy; and
- other risks detailed in the Company's filings with the Securities and Exchange Commission and available on its website at http://www.sec.gov.
All statements made in this news release are made only as of the date of this release. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
China XD Plastics
Mr. Taylor Zhang
CFO (New York)
US Phone: +1 (212) 747-1118
Email: [email protected]
Email: [email protected]
SOURCE China XD Plastics Company Limited