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China Resources Reports Third Quarter Earnings
BusinessWire, Thursday, November 13, 1997 at 14:47
HONG KONG--(BUSINESS WIRE)--Nov. 13, 1997--China Resources
Development, Inc. (NASDAQ:CHRB, chrb.com), a leading
natural rubber distributor based in the People's Republic of China
(PRC), today announced operating results for the third quarter and
nine months ended September 30, 1997. Results have been converted
from Renminbi (the lawful currency of the PRC) to U.S. dollars (for
information purposes), at the prevailing exchange rate as quoted by
the People's Bank of China on September 30, 1997 (U.S.$1.00=Rmb8.30).
For the three months ended September 30, 1997, sales fell to
Rmb419.3 million (U.S.$50.5 million), compared with Rmb486.8 million
(U.S.$58.6 million) during the year-ago third quarter. The lower
sales during the period was primarily due to reduced trading of
agricultural products other than rubber. The Company's natural
rubber distribution sales increased 4.4% in the 1997 third quarter
compared to the year-earlier period, however, gross profit margins
fell significantly as currency deflation in Thailand, Indonesia and
Malaysia (three of the world's leading natural rubber producing
countries) impacted the worldwide natural rubber market, pushing the
per-ton price down in the third quarter to Rmb9,000, versus Rmb10,400
in the first half of 1997 and Rmb12,000 per ton in the comparable
1996 period.
Net income for the three-month period was Rmb8.8 million
(U.S.$1.1 million), or Rmb1.46 (U.S.$0.18), compared with net income
of Rmb15.6 million (U.S.$1.9 million), or Rmb5.31 (U.S.$0.64) per
share, in the comparable 1996 period. Per share results are based on
6,029,004 and 2,939,589 weighted average shares outstanding for the
1997 and 1996 three month periods, respectively.
The weighted average share count increase for both the three and
nine month periods ended September 30, 1997 reflects the conversions
into common stock of the Company's Series B Convertible Preferred
Stock, which were sold in the Company's 1996 private placements and
of which no shares remain unconverted or outstanding. Per share
results and weighted average shares are adjusted for a one-for-ten
reverse stock split of the Company's outstanding common stock that
was effective on December 31, 1996.
For the nine months ended September 30, 1997, sales were Rmb893.8
million (U.S.$107.7 million), compared with sales of Rmb1,282.5
million (U.S.$154.5 million) in the year-earlier period. Gross
profit margins in the first nine months of 1997 impacted by reduced
rubber prices fell to 3.8%, versus 9.1% in the year-earlier period,
and adversely affected net income. For the first nine months of
1997, net income was Rmb18.9 million (U.S.$2.3 million), or Rmb3.19
(U.S.$0.38) per share, versus Rmb28.7 million (U.S.$3.5 million), or
Rmb9.78 (U.S.$1.18) per share. Per share results are based on
5,917,893 and 2,939,589 weighted average shares outstanding in the
1997 and 1996 nine-month periods, respectively.
Li Shunxing, President of China Resources Development, Inc.,
commented on the results, "The unfavorable market conditions that
have been impacting our operations continue to persist, and the
Southeast Asian currency crisis has led to further profit margin
erosion in the most recent quarter. We have been successful in
mitigating some of the adverse effects by hedging our exposure to
falling natural rubber prices. Additionally, our corporate
restructuring and streamlining program, instituted in the 1996 fourth
quarter, has contributed to improved corporate efficiency and,
significantly, 44% lower selling, general and administrative expenses
through the first nine months of 1997."
China Resources Development, Inc., with offices in Hong Kong and
the Hainan Province in the PRC, through a subsidiary, owns a 56%
interest in Hainan Zhongwei Agricultural Resources Co. Ltd. (HARC).
HARC markets and distributes dry, natural rubber, liquid latex and
other agricultural products, and procures production materials and
supplies for major customers. The Hainan Province supplies over 60%
of the PRC's natural rubber production. Additional corporate
information is available at the Company's web site - www.chrb.com.
Except for the historical information in this press release, it
includes forward-looking statements that involve risks and
uncertainties, including, but not limited to the outcome of the
Company's due diligence process on its proposed strategic investment,
the impact of weather, competitive pressures from within the natural
rubber industry, quarterly fluctuations in results, the management of
growth, market dynamics and other risks detailed from time to time in
the Company's Securities and Exchange Commission filings. Actual
results may differ materially from management expectations.
*T
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
Condensed Consolidated Income Statements (Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1997 1996 1997
RMB RMB US$(a) RMB RMB US$(a)
Sales 419,295 486,788 50,517 893,762 1,282,507 107,682
Cost of Sales 410,396 445,430 49,445 860,071 1,165,224 103,623
Gross Profit 8,899 41,358 1,072 33,691 117,283 4,059
Depreciation of
fixed assets 1,195 484 144 2,039 1,692 246
Selling and
administrative
expenses 6,263 14,132 755 21,979 39,305 2,648
Operating income 1,441 26,742 173 9,673 76,286 1,165
Financial
income/(expenses),
net (859) (10,122) (103) 31 (31,798) 4
Other income
(losses), net 19,981 11,127 2,407 38,726 15,370 4,666
Income before
income taxes 20,563 27,747 2,477 48,430 59,858 5,835
Income taxes 1,806 2,335 217 7,959 7,912 959
Net income
before minority
interests 18,757 25,412 2,260 40,471 51,946 4,876
Minority
interests 9,979 9,807 1,202 21,577 23,208 2,600
Net income 8,778 15,605 1,058 18,894 28,738 2,276
Earnings per
share 1.46 5.31 0.18 3.19 9.78 0.38
Weighted average
number of common and
common equivalent
primary shares
outstanding 6,029,004 2,939,589 6,029,004 5,917,893 2,939,589 5,917,893
(a) Based on an exchange rate of U.S.$1.00=Rmb8.30 on September 30, 1997.
*T
CONTACT: Edward Wong
Financial Controller
011/852/28107205 or fc@chrb.com
or
Robert L. Rinderman, Joseph N. Jaffoni
Jaffoni & Collins Incorporated
212/835-8500 or info@jcir.com
KEYWORD: NEW YORK
INDUSTRY KEYWORD: CHEMICALS/PLASTICS EARNINGS
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