China Shuangji Cement, Ltd announces Third Quarter 2010 results

China Shuangji Cement, Ltd announces Third Quarter 2010 results
Published: 23 November 2010

China Shuangji Cement, Ltd a leading producer of high-quality Portland cement in Shandong and Hainan Provinces in the People’s Republic of China (PRC), announced its financial results for the third quarter ended September 30, 2010.

"We experienced higher revenues in the third quarter due to an increase in cement sales to 361,562t from 329,832t in the same period last year. We also experienced strong margins from an increase in the average unit price of our cement, which was greater than the increase in raw material prices," commented Mr. Wenji Song, Chairman and President of China Shuangji Cement, Ltd.

"This resulted in solid revenue increases and a 36 per cent increase in gross profit in the third quarter as we continued to sell all the cement we produced. During the quarter, we moved closer towards completing our new, state-of-the-art cement factory in Zhaoyuan City, which we expect to bring into full production mode by the end of the year. We see more than enough demand from local contractors and increased infrastructure spending to absorb all of our new capacity as we bring our new 1Mt cement plant online."

Third Quarter 2010 results
Revenue for the three months ended September 30, 2010, increased 7 per cent to US$15.1m from US$14.1m a year ago. The increase was primarily due to an increase of sales quantity to 361,562 metric tons for the three months ended September 30, 2010 from 329,832t a year ago.

Cost of sales for the three months ended September 30, 2010, increased US$418,348, or 3 per cent, to US$13m from US$12.6m for the same period a year ago. The increase was primarily due to an increase of sales quantity and higher raw material prices. Cost of sales as a percentage of total net revenue decreased from 89.03 per cent in the three months ended September 30, 2009, compared to 86.09 per cent for the three months ended September 30, 2010.

Gross profit for the three months ended September 30, 2010, increased by US$551183, or 36 per cent, to US$2.1m from US$1.5m for same period a year ago. The increase was primarily due to fact that the increase in average unit price of cement was greater than the increase in raw material prices. Gross margin increased to 14 per cent from 11% in the same period last year.

Operating expenses for the three months ended September 30, 2010, increased by US$328,871 to US$429,717 from US$100,846 for the same period a year ago. The increase was primarily due to issuances of stock and warrants as consideration for certain consulting and professional services.

Operating income for the three months ended September 30, 2010, increased by US$222,312, or 15%, to US$1.7m from US$1.4m for the same period a year ago. The increase was primarily due to an increase in sales.

Net income for the three months ended September 30, 2010, was US$567,840, or US$0.01 per diluted share, compared to US$715,504, or US$0.02 per diluted share, a year ago, a decrease of 21 per cent. The decrease was primarily due to the one-time impairment loss on assets held for sale recorded in other expenses in the amount of US$810,056.

Business Outlook
"Going forward, we continue to see significant growth in the building sector in China, especially in the areas where we operate in Shandong and Hainan provinces," said Mr. Wenji Song. "This is supported overall by solid fundamentals for our industry, including a vibrant domestic economy, significant government stimulus and the rapid development of China’s infrastructure as well as increased spending on urban infrastructure, which should have a significant impact on cement demand."

Mr. Song added, "With the near completion of our new 1Mt cement plant we are now entering a growth phase. As a result, we anticipate that this will allow us to increase our production capacity by roughly 66 per cent, to an estimated 2.5Mta, resulting commensurate increases in revenue and profitability."