ANHUI, China, April 15, 2008 (PRIME NEWSWIRE) -- China Runji Cement Inc. (OTCBB:CRJI) ("Runji" or "the Company"), a leading cement manufacturing and distribution company headquartered in Anhui Province, People's Republic of China ("PRC"), today reported financial results for its second quarter ended February 29, 2008.
Second Quarter 2008 Highlights
* Revenue totaled $5.9 million, down 13.6% from same period last year. * Gross profit increased to $0.93 million, up 9.8% from $0.85 million for the same period last year * Gross margin improved to 15.8% from 12.5% for the same period last year * Operating income was $0.5 million, flat with last year * Net income was $0.9 million, or $0.01 per fully diluted share, up 411.8% from same period last year
Second Quarter Fiscal Year 2008 Results
Revenue for the three months ended February 29, 2008 was $5.9 million, down 13.6% from $6.8 million for the same period in 2007. The decrease in revenue was due to unusual heavy snow in southern and eastern China during January and February that disrupted the Company's manufacturing activities. Anhui province, where the production line of Runji is located, was one of the seriously paralyzed areas in China, leading to a temporary production suspension for 47 days due to power outages and road closures.
Gross profit for the second quarter of 2008 totaled $0.93 million, up 9.8% compared with $0.85 million for the same period last year. Gross profit margin was 15.8% for the second quarter of 2008, up from 12.5% for the same quarter of 2007. Higher gross margin was attributed to a higher market price for cement and lower production costs.
Operating income for the second quarter 2008 was $0.5 million, flat with the second quarter of 2007. Operating margin was 8.3%, compared to 7.2% in the same quarter of 2007.
Net income for the second quarter of 2008 was $0.9 million, or $0.01 per fully diluted share, up 411.8% from net income of $0.2 million, or $0.00 per fully diluted share, in the second quarter of 2007. Net margin for the period grew to 14.4% from 2.4% in second quarter 2007.
"Despite the slight decrease in revenue due to the adverse weather effect, we are pleased to achieve significantly higher margins and net income in the quarter," stated Mr. Shouren Zhao, CEO of China Runji Cement Inc. "Over the last year, we have ramped up production to full capacity to meet strong market demand, resulting in lower per unit operating costs and higher margins. In addition, our dedication to improving oversight and manufacturing efficiency has clearly been effective in improving our bottom line. Although we effectively had 47 fewer days than normal for the quarter, we are pleased with our overall results."
Six Month Results
For the six months ended February 29, 2008, revenues were $16.2 million, up 13.7% from $14.3 million for the same period last year. Gross profit was $3.5 million, up 101.4% from $1.7 million for the same period 2007. Gross margin was 21.3%, a significant increase from 12.0% in the same period a year earlier. Operating income was $2.5 million, up 146.8% from $1.0 million for the same period in fiscal year 2007; operating margin was 15.5% and 7.2% for the first six months in 2008 and 2007, respectively. Net income increased 761.0% to $2.3 million, or $0.03 per fully diluted share, from $0.3 million, or $0.00 per fully diluted share in the first half of fiscal 2007.
Financial Condition
For the six months ended February 29, 2007, the Company had $0.2 million in cash and cash equivalents, $3.7 million in working capital and a current ratio of 1.40. Runji had $0.4 million in short-term loans payable and $16.4 million in shareholders' equity. The Company's cash flows from operations in the 6-months of financial year 2008 was $0.6 million. To date, Runji has funded most of its cash needs with loans from related parties.
Business Outlook
As the demand for high grade cement continues to outpace the growth in supply, Runji foresees steady growth in its business activities. The Company is the only supplier of PII52.5 cement, China's highest grade of cement, in northern Anhui Province. Furthermore, Anhui's annual growth rate of 11%, which is above the national average, has translated into an abundance of construction projects, particularly large-scale, government-sponsored infrastructure projects which demand the high quality cement.
"With a current output of 2,500 tons of cement per day, our production facilities are operating at full capacity," said Zhao. "To address this, construction of a new production line to double our current capacity is well underway and expected to be on line by August of this year. We are also constructing a waste heat-powered electric generator which is expected to be put into use at roughly the same time, further reducing operating costs and increasing margins. With this added capacity, combined with our prime location in one of China's most quickly developing provinces and our role as the only supplier of high grade PII52.5 cement in the region, we expect to see aggressive growth in sales going forward."
For the full year fiscal year 2008 ending August 30, Runji is expecting to achieve revenues of $37 million and net income of $5.2 million, or $.07 per fully diluted share. These figures are expected to increase significantly for fiscal year 2009 due do the contributions of a second production line.
About China Runji Cement, Inc.
Founded in 2003, China Runji Cement, Inc. is one of the leading players in cement production and distribution. In October 2007, the Company became a U.S. public company following the completion of a share exchange with Fitmedia Inc. The Company's certified manufacturing facilities containing cutting-edge technology and advanced equipment and are capable of producing as much as 1 million tons of cement annually. Furthermore, the Company's solid distribution network and customer-orientated services have earned Runji's products a superior reputation among its customers. Headquartered in Anhui Province, the Company's markets include major local cities such as Hefei, Nanjing, and Liu'an.
For more information on the Company and its products, please visit http://www.chinarunji.com/index.asp.
Safe Harbor Statement
This press release contains certain statements that may include 'forward-looking statements' as defined in the Securities Act of 1933, and the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included herein are 'forward-looking statements'. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You 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 those discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
China Runji Cement Inc.
Consolidated Statements of Operations
For the Three Months For the Six Months
Period Ended Period Ended
February 29, February 29,
---------------------- ------------------------
2008 2007 2008 2007
---------- ---------- ----------- -----------
(Unaudited) (Unaudited)
Revenue $5,908,827 $6,837,752 $16,220,113 $14,271,413
---------- ---------- ----------- -----------
Cost of goods sold 4,973,977 5,986,323 12,764,571 12,555,917
---------- ---------- ----------- -----------
Gross Profit 934,850 851,429 3,455,542 1,715,496
---------- ---------- ----------- -----------
Operating Costs and
Expenses:
Selling expenses 24,131 39,040 40,441 192,425
A&G expenses: 398,922 275,967 852,971 446,462
Depreciation of
property, plant
and equipment 21,921 47,480 43,087 55,740
---------- ---------- ----------- -----------
Total operating
costs and expenses 444,974 362,487 936,499 694,627
---------- ---------- ----------- -----------
Income From
Operations 489,876 488,942 2,519,043 1,020,869
Interest income (18) -- (1,431) --
Interest expenses 21,901 241,538 25,595 622,860
Reversal of allowance
for doubtful
accounts (209,537) -- (209,537) --
Other (income)
expenses (11,311) 1,089 (104,725) 1,932
---------- ---------- ----------- -----------
Income Before
Income Taxes 688,841 246,315 2,809,141 396,077
Income taxes (163,486) 79,796 524,198 130,705
---------- ---------- ----------- -----------
Net Income $ 852,327 $ 166,519 $ 2,284,943 $ 265,372
---------- ---------- ----------- -----------
Other Comprehensive
Income
Foreign currency
translation
adjustment 590,299 146,868 915,942 351,174
---------- ---------- ----------- -----------
Comprehensive
Income $1,442,626 $ 313,387 $ 3,200,885 $ 616,546
---------- ---------- ----------- -----------
Earnings Per Share,
Basic and Diluted $ 0.01 $ -- $ 0.03 $ --
---------- ---------- ----------- -----------
Weighted Average
Shares Outstanding 78,832,064 73,500,000 77,044,944 73,500,000
---------- ---------- ----------- -----------
China Runji Cement Inc.
Consolidated Balance Sheets
---------------------------------------------------------------------
February 29,
2008
-----------
(Unaudited)
Current Assets
Cash and cash equivalents $ 240,012
Accounts receivable, net 688,681
Advances 8,688,710
Notes receivable 315,213
Due from related parties 67,152
Inventory 2,291,454
Prepaid expenses and other receivables 835,114
-----------
Total Current Assets 13,126,336
Property, plant and equipment, net 33,469,616
Intangible Assets & Deferred Charges 2,930,384
-----------
Total Assets $49,526,336
-----------
Current Liabilities
Payables and accrued liabilities $ 6,593,179
Customer deposit 133,933
Short-term loans 421,941
Taxes payable 1,976,834
Wages payable 276,679
-----------
Total Current Liabilities 9,402,566
Due to Related Parties (L/T) 23,676,471
-----------
Total Liabilities 33,079,037
-----------
Commitments and Contingencies
Owners' Equity
Preferred Stock: 20,000,000 shares authorized,
$0.0001 par value (No shares issued and
outstanding) --
Common Stock: 80,000,000 shares authorized,
$0.0001 par value (78,832,064 shares issued
and outstanding) 7,883
Additional paid in capital 12,327,315
Accumulated other comprehensive income 1,707,556
Retained (unrestricted) earnings 2,404,546
-----------
Total owners' equity 16,447,300
-----------
Total Liabilities and Owners' Equity $49,526,337
-----------
China Runji Cement Inc.
Consolidated Statements of Cash Flows
---------------------------------------------------------------------
For the Six Months
Period Ended
February 29,
--------------------------
2008 2007
----------- ------------
(Unaudited)
Operating activities
Net income $ 2,284,943 $ 265,372
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities:
Reversal of allowance of doubtful
accounts (209,537) --
Depreciation, expense and cost 1,299,670 1,492,475
Changes in operating assets and
liabilities:
Accounts receivable, net 2,638,811 (247,441)
Notes receivable 268,552 (363,002)
Advances to suppliers (4,685,990) (365,970)
Prepaid expenses and other receivables (34,159) 232,693
Inventory (592,875) (761,886)
Accounts payable and accrued
liabilities (507,849) 1,620,539
Customer Deposit (619,360) 706,879
Tax payable 658,045 147,036
Wages payable 63,697 (21,706)
----------- ------------
Net cash provided by (used in)
operating activities 563,948 2,704,989
----------- ------------
Investing activities
Loan to related parties 15,267 (393,921)
Property, plant and equipment additions (1,744,656) (12,786,608)
----------- ------------
Net cash provided by (used in)
investing activities (1,729,389) (13,180,529)
----------- ------------
Financing activities
Short term loan proceeds -- 1,557,214
Paydown of short term loan (1,166,247) --
Long-term Loans Payable -- --
Loan from related parties 2,148,486 9,060,223
Paydown of short loan from related parties (3,309) --
Capital distribution (12,889) --
----------- ------------
Net cash provided by (used in)
financing activities 966,041 10,617,437
----------- ------------
Effect of exchange rate changes on
cash and cash equivalents (961,067) 161,133
----------- ------------
Increase (decrease) in cash and
cash equivalents (1,160,467) 303,030
Cash and cash equivalents, beginning
of year 1,400,479 62,704
----------- ------------
Cash and cash equivalents, end of year $ 240,012 $ 365,734
----------- ------------
Supplemental Disclosures
Interest Paid $ 46,411 $ 447,956
Income taxes paid $ -- $ --
----------- ------------