NEW YORK, May 17, 2011 (GLOBE NEWSWIRE) — China Carbon Graphite Group, Inc. (OTCBB:CHGI) (“China Carbon” or the “Company”), the largest wholesale supplier of fine-grain and high-purity graphite in China and one of the nation’s top manufacturers of carbon and graphite products, today announced its financial results for the first quarter ended March 31, 2011.
First Quarter 2011 Financial Highlights:
Revenue increased 137%, from .85 million in Q1 2010 to .46 million in Q1 2011
EBITDA improved 155% from .99 million in Q1 2010 to .52 million in Q1 2011
Net income grew 139%, from (.86 million) in Q1 2010 to .33 million in Q1 2011
Adjusted net income rose 91%, from .33 million in Q1 2010 to .63 million in Q1 2011
Donghai Yu, China Carbon’s CEO, said, “As we expected, our first quarter results were excellent. In particular, we are very pleased with the significant improvement in our EBITDA, which increased 154 percent. We successfully adjusted our product mix in the first quarter of 2011 to capitalize on market demand, producing and selling more of our higher margin products, like high purity graphite, than our lower margin products, such as graphite electrodes. Notably, our sales benefited from the increasing applications for our higher margin products in China’s rapidly developing solar and mold industries.”
Revenue
During the first quarter of 2011, China Carbon had sales of .5 million compared to sales of .9 million in the first quarter of 2010, an increase of .6 million or 137%. The Company’s revenue was generated mainly from sales of graphite electrodes, fine grain graphite, high purity graphite, and semi-processed graphite products. The increase in sales was primarily due to significant growth in the demand for the Company’s products as a result of market recovery, new customer developments and the Company’s change in its product mix to include more high purity graphite products, the average unit price of which increased 75% in the first quarter of 2011 compared to the same period last year. Also, the rise in graphite needs in solar and mold applications increased the demand for China Carbon’s products as raw material. Approximately 30% of total sales in the first quarter of 2011 were revenue from approximately 40 new customers developed subsequent to March 31, 2010.
Gross Profit and EBITDA
The Company’s gross margin improved from 21% in the first quarter of 2010 to 23% in the first quarter of 2011. The improved gross margin reflects the variance in production mix, as the percentage of the Company’s sales of higher margin, high purity graphite products increased significantly. Fine grain graphite products decreased its margin due to the demand shifts for higher purity graphite electrodes in the first quarter of 2011. The increased sales and improved margin of high purity graphite products offset the decreased sales of the Company’s lower margin products, like graphite electrodes, and decreased margins and unit prices of its fine grain graphite products. The Company’s EBITDA in the first quarter of 2011 was .52 million compared to .99 million for the first quarter of 2010, representing an increase of 155%. EBITDA includes land use tax and non-cash compensation totaling ,042,266
Net Income
For the first quarter of 2011, net income was .33 million as compared to net loss of .86 million in the first quarter of 2011, an increase of .19 million or 139%.
Recent Updates
China Carbon is currently constructing a new baking plant that it expects will become fully operational by August 2011 and will increase the Company’s annual production capacity from 30,000 tons to 60,000 tons. The exterior of this new facility has already been constructed. The Company plans to have its new plant specialize in manufacturing higher margin products, including large size ultra high power graphite electrode, high purity graphite and fine gain graphite.
Business Outlook
Mr. Yu commented, “Graphite prices are up across the board; for instance, the price range for large flake graphite in May 2010 was ,300 to ,700 per ton, now it is ,275 to ,000 per ton. We anticipated this jump in graphite prices and paid for additional levels of inventory in the third and fourth quarters of 2010, effectively locking in the price of raw materials before graphite prices started to climb. Due to our six month production cycle, we expect that we will fully realize the benefits from this move in the second half of fiscal 2011 and we anticipate that our margins and profitability will increase accordingly.”
In an effort to further position itself for future success, China Carbon looks to integrate its upstream and downstream verticals, natural graphite mining industry and solar graphite manufacturing, respectively. The Company expects these acquisitions would afford it the opportunity to build a separate facility focused purely on nuclear graphite. The Company’s expected improvement in cash flow coupled with its solid relationships with Chinese banks�notably, China Construction Bank�has China Carbon anticipating that it will be able to allocate funds toward producing nuclear graphite and the integration of upstream and downstream verticals in 2012 through its cash flow and bank financing. The Company expects an initial outlay of million for the nuclear facilities.
Mr. Yu stated, “The Chinese government is committed to its pursuits of nuclear and solar energy sources as the nation looks to reduce its dependence on coal and boost energy supplies in poor and polluted regions of the country. We look forward to helping improve the quality of life in China by providing its developing nuclear and solar industries with superior quality graphite products.”
About China Carbon Graphite Group, Inc.
China Carbon Graphite Group, through its affiliate, Xingyong Carbon Co., Ltd., manufactures graphite and carbon based products in China. The company is the largest wholesale supplier of fine-grain and high-purity graphite in China and one of the nation’s top overall producers of carbon and graphite products. Fine grain graphite is widely used in smelting for colored metals and rare earth metal smelting as well as the manufacture of molds. High purity graphite is used in metallurgy, mechanical industry, aviation, electronic, atomic energy, chemical industry, food industry and a variety of other fields. In September 2007, the Company was approved and designated by the Ministry of Science & Technology as a “National Hi-tech Enterprise,” a distinction which the Company still holds. Of the more than 400 carbon graphite producers in China, China Carbon is the only non-state-owned company to receive this honor. For more information, please visit www.chinacarboninc.com.
Safe Harbor Statement
This release contains certain “forward-looking statements” relating to the business of the Company and its subsidiary companies. These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,” “expects” or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risk factors set forth in the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q.
CONTACT: Investor Contact:
Mr. Kevin Fickle (English speaking)
NUWA Group, LLC
Tel: +1-925-330-8315
Email: Kevin@nuwagroup.com
Mr. Kevin Ma (Mandarin speaking)
NUWA Group, LLC
Tel: +1-415-571-3640
Email: qma@nuwagroup.com
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