Industry Press Releases

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

Saturday, May 16, 2015
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China Shengda Packaging Group Inc., 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

Sales Analysis (Millions)

Three Months

Ended March 31,  
2015

Three Months  

Ended March 31,

2014

     

Revenues– Paper Cartons (millions)

$31.0

$26.1

Revenues– Corrugating Medium Paper (millions)                                

$8.5

$9.3

Revenues– Inter-segment Transactions Elimination (millions)

($1.5)

($3.2)

Color Cartons (% of total revenues)

22.1%

25.3%

Flexo Cartons (% of total revenues))

59.6%

55.6%

Paper Cartons Sales Volume (M sq meters)

87.6

67.9

Corrugating Medium Paper Sales Volume ('000 tons)

24.3

25.4

Color Cartons  (avg price per sq meter)

$0.40

$0.39

Flexo Cartons (avg price per sq meter)

$0.34

$0.38

Corrugating Medium Paper (avg price per ton)

$349

$368

 

Summary Results (Millions)

Three Months 
Ended March 31, 

2015

Three Months
 Ended March 31, 
2014

     

Revenues

$37.9

$32.3

Gross Profit

$5.0

$4.1

Gross Margin (%)

13.2%

12.8%

Operating Expenses

$5.1

$4.7

Operating Income (Loss)

($0.1)

($0.6)

Operating (Loss) Margin (%)

(0.2%)

(1.7%)

Net Income (Loss) Attributable to Stockholders                                  

($0.1)

($0.5)

EPS - Basic & Diluted

($0.00)

($0.01)

Weighted Average Shares Outstanding

38.8

38.8

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: cindy.hu@cnpti.com                                                             
Website: http://www.cnpti.com                                              

Investor Relations Contact:

Weitian Group LLC  
Tina Xiao
Tel: +1-917-609-0333
Email: tina.xiao@weitian-ir.com

CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in US$)

   
 

March 31, 

   

December 31,

ASSETS

 

2015

 

2014

  Current assets

 

(Unaudited)

   

  Cash and cash equivalents

 

$                  8,028,542

 

$             10,909,547

  Restricted cash

 

12,884,090

 

13,764,420

  Accounts and notes receivable, net

 

42,635,137

 

40,385,615

  Inventories

 

17,588,023

 

16,197,839

  Prepayments and other receivables

 

3,238,871

 

1,714,052

  Amount due from related parties

 

123,253

 

51,093

  Deductable value added tax payable

 

1,025,382

 

867,869

  Total current assets

 

85,523,298

 

83,890,435

         

  Non-current assets

       

  Property, plant and equipment, net

 

76,273,465

 

72,274,052

  Land use right

 

11,634,494

 

11,650,850

  Deferred tax assets

 

3,424,414

 

2,965,241

  Goodwill

 

181,149

 

180,373

Total assets

 

$              177,036,820

 

$          170,960,951

         

LIABILITIES AND EQUITY

       

  Current liabilities

       

  Accounts and notes payable

 

$                45,478,884

 

$            41,954,268

  Amounts due to related parties

 

1,325,858

 

2,961,704

  Accrued expenses and other payables

 

4,047,345

 

2,964,988

  Taxes payable

 

1,422,169

 

1,826,922

  Short-term loans

 

3,500,000

 

3,500,000

  Current portion of long-term loans

 

4,500,000

 

-

  Total current liabilities

 

60,274,256

 

53,207,882

         

  Non-current liabilities

       

  Long-term loans

 

-

 

4,500,000

  Total liabilities

 

$                60,274,256

 

$            57,707,882

         

  Commitment and contingencies

       

  Equity

       

  Stockholders' equity

       

  Common stock (US$0.001 par value, 190,000,000 shares authorized,
  38,790,811 shares issued and outstanding at March 31, 2015 and
  December 31, 2014)

 

38,791

 

38,791

  Additional paid-in capital

 

43,036,464

 

43,036,464

  Appropriated retained earnings

 

8,467,835

 

8,293,281

  Unappropriated retained earnings

 

49,655,975

 

49,894,124

  Accumulated other comprehensive income

 

12,250,015

 

11,778,550

  Total equity for stockholders of China Shengda  Packaging

 

113,449,080

 

113,041,210

  Noncontrolling interest

 

3,313,484

 

211,859

  Total equity

 

116,762,564

 

113,253,069

Total liabilities and equity

 

$              177,036,820

 

$          170,960,951

 
 
 

 

  

CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Amounts in US$)

           
     

Three Months Ended March 31,

     

2015

 

2014

     

(Unaudited)

 

(Unaudited)

Revenues

   

$            37,927,419

 

$           32,289,979

Cost of goods sold

   

32,920,876

 

28,156,680

Gross profit

   

5,006,543

 

4,133,299

Operating expenses

         

  Selling expenses

   

1,865,438

 

1,849,929

  General and administrative expenses

   

3,217,461

 

2,843,048

     

5,082,899

 

4,692,977

Other income/(expenses)

         

  Interest income

   

123,162

 

497,819

  Interest expense

   

(191,789)

 

(323,685)

  Subsidy income

   

13,016

 

-

  Other expense

   

-

 

(641,445)

     

(55,611)

 

(467,311)

           

Non-operating income/(expenses)

   

(121,891)

 

116,086

           

Loss before income tax expense and
noncontrolling interest

   

(253,858)

 

(910,903)

           

  Income tax benefit

   

154,049

 

327,083

Net loss

   

(99,809)

 

(583,820)

  Net loss attributable to noncontrolling interest

   

(36,214)

 

(46,128)

Net loss attributable to Company's common stockholders

   

$               (63,595)

 

$             (537,692)

           

  Basic and diluted loss per share

   

$                   (0.00)

 

$                   (0.01)

  Weighted-average number of shares
  outstanding - basic and diluted

   

38,790,811

 

38,790,811

           

Comprehensive income/(loss):

         

Net loss

   

$               (99,809)

 

$             (583,820)

  Foreign currency translation adjustment

   

471,309

 

(1,016,788)

Comprehensive income/(loss)

   

371,500

 

(1,600,608)

  Comprehensive income/(loss) attributable to
  noncontrolling interest

   

(36,370)

 

(45,789)

Net comprehensive income/(loss) attributable 
to the Company's common stockholders

   

$               407,870

 

$          (1,554,819)

           
 

  

CHINA SHENGDA PACKAGING GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in US$)

         
   

 Three Months Ended March 31,

   

2015

 

2014

   

(Unaudited)

 

(Unaudited)

Cash flows from operating activities

       

Net loss

 

$              (99,809)

 

$             (583,820)

Adjustments to reconcile net loss to net cash
provided by operating activities:

       

Depreciation and amortization expenses

 

1,830,116

 

2,098,987

Deferred tax

 

(444,502)

 

(495,581)

Loss from disposal of property, plant and equipment

 

-

 

641,445

Change in operating assets and liabilities:

       

  Restricted cash

 

935,525

 

571,900

  Accounts and notes receivable

 

(2,063,749)

 

6,458,591

  Inventories

 

(535,992)

 

(3,042,023)

  Prepayments and other receivables

 

(1,470,454)

 

(2,635,072)

  Accounts and notes payable

 

2,255,240

 

590,571

  Amount due from(to) related party

 

(1,713,158)

 

(301,589)

  Accrued expenses and other payables

 

1,030,747

 

(106,182)

  Tax payables

 

(563,965)

 

537,051

Net cash (used in)provided by operating activities

 

(840,001)

 

3,734,278

         

Cash flows from investing activities

       

  Purchase of property, plant and equipment

 

(2,002,882)

 

(2,026,524)

  Prepayment paid for construction in progress

 

(72,515)

 

-

  Proceeds from disposal of property, plant and
  equipment

 

-

 

177,023

Net cash used in investing activities

 

(2,075,397)

 

(1,849,501)

         

Cash flows from financing activities

       

  Proceeds from short-term loans

 

-

 

4,043,582

  Proceeds from long-term loans

 

-

 

4,533,292

  Repayment of short-term loans

 

-

 

(3,226,582)

  Repayment of long-term loans

 

-

 

(4,533,292)

  Restricted cash

 

-

 

147,060

Net cash flows provided by financing activities

 

-

 

964,060

         

  Effect of foreign currency exchange rate
  fluctuation on cash and cash equivalents

 

34,393

 

(81,117)

  Net changes in cash and cash equivalents

 

(2,881,005)

 

2,767,720

Cash and cash equivalents, beginning of year

 

10,909,547

 

6,569,495

Cash and cash equivalents, end of year

 

$            8,028,542

 

$            9,337,215

         

Cash paid during the year for:

       

Interest paid

 

$               181,636

 

$               171,875

Income taxes paid

 

$               164,143

 

$               273,681

         

Non-cash financing transactions:

       

Property, plant and equipment and inventory injected by
NCI

 

$            3,137,995

 

$                           -

 

 

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