NEW YORK, April 20, 2009 (GLOBE NEWSWIRE) -- China Carbon Graphite Group, Inc. (OTCBB:CHGI), China's largest wholesale supplier of fine grain and high purity graphite announced its financial results for fiscal year ended December 31, 2008. China Carbon is also one of the nation's top three producers of specialty carbon and graphite products.
Fiscal Year 2008 Highlights
-- Net revenues increased 7.67% to a record $27.3 million
-- Gross profit increased 36.41% to a record $6.7 million
-- Comprehensive income increased 11.8% to a record $6.03 million
-- Net income increased 11.08% to a record $3.98 million
-- Net income available to common shareholders (after a one-time,
non-cash deemed preferred stock dividend of $854,300) was
$3.13 million
-- Diluted earnings per share were $0.21
-- Basic earnings per share excluding the one-time, non-cash
deemed preferred stock dividend were $0.32
"This was a record year for our Company driven by increased demand from both new and existing customers. We are extremely pleased with the significant increase in gross profit, which was the result of a shift of our production focus from low margin graphite electrodes to fine grain graphite and high purity graphite which generate higher gross margins," commented Mr. Donghai Yu, CEO of China Carbon Graphite Group.
"The Company was required to close its factory for almost two months because of a government mandated shutdown due to the Beijing Olympics during August 2008. The production of all of the Company's products ceased during this period. The process to produce finished goods takes up to six months. Therefore, the shutdown affected sales in the fourth quarter of 2008 as well as the first quarter of 2009.
"We expect 2009 to be a very strong year for China Carbon. We plan to pursue acquisitions of China based carbon companies with similar revenues that will allow us to enter the highly profitable nuclear graphite market. At this time China has over 25 nuclear reactors under construction and each reactor requires approximately 10 metric tons of nuclear graphite at an average cost of US$150 million. China Carbon has the ability to become the world's low cost producer of nuclear graphite. The acquisition plan will increase earnings and strengthen our leadership in the specialty graphite market.
"Additionally, we expect to benefit from China's Stimulus Plan by receiving bank loans at a low interest rate. We will use the bank loans to expand the production capacity at the current plant in Inner Mongolia," concluded Yu.
Full Year 2008 Financial Results
Revenue for fiscal year 2008 totaled $27.3 million compared to sales of $25.36 million for fiscal year 2007. This increase resulted from our marketing efforts both to develop new customers and make follow-on sales to existing customers, although our sales decreased in the fourth quarter reflecting the closure of Company's plant facilities for almost two months for the Olympics in August 2008 as part of the Chinese government's program to reduce air pollution during that period. This shutdown reduced our production in the third quarter and therefore affected sales in the fourth quarter 2008 because it takes up to six months to produce graphite products.
Gross margin increased from 19.36% in 2007 to 24.53% in 2008. The improvement in gross profit margin was due to increased sales of higher margin products - fine grain graphite and high purity graphite.
Selling expenses increased from $124,241 in 2007 to $504,884 in 2008. The increase was due to the effort to market our high margin products - fine grain graphite and high purity graphite.
General and administrative expense increased from $1.12 million in 2007 to $1.95 million in 2008. This increase was largely the result of an increase in our bad debt expense of approximately $200,000 and an increase in our allowance for bad debts of $860,000. One customer accounted for approximately $450,000 of these charges.
Net income for 2008 was $3.98 million compared to $3.59 million for 2007.
As a result of the automatic conversion of our 3% convertible notes into shares of series A preferred stock and warrants, we incurred a preferred stock deemed dividend of $854,300, representing the intrinsic value of the beneficial conversion feature of the series A preferred stock resulting from the warrant issuance. The deemed preferred stock dividend is a one time, non-cash charge which did not affect our operations or cash flow in 2008.
About China Carbon Graphite Group, Inc.
China Carbon Graphite Group, through its affiliate, Xingyong Carbon Co., Ltd., manufactures carbon and graphite 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 Ministry of Science & Technology as a "National Hi-tech Enterprise." Of the 400 plus carbon graphite producers in China, China Carbon is the only non-state-owned company to receive this honor. For more information, visit http://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.