CHRB REPROTS 97 PROFIT BUT 4th QUARTER LOSS
China Resources Reports 1997 Year End and Fourth Quarter
Earnings
HONG KONG--(BUSINESS WIRE)--April 14, 1998--China Resources
Development Inc. (NASDAQ:CHRB), a leading natural rubber distributor
based in the People's Republic of China (PRC), today announced operating
results for the year and fourth quarter ended Dec. 31, 1997.
Financial results are preliminary and unaudited; however, management believes
that all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The company has filed an
extension with the Securities and Exchange Commission and expects to file its
1997 Form 10-K report, which will include audited financial results, on or
before April 15, 1998. 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 Dec. 31,
1997 (U.S. $1.00 = Rmb8.28).
For the year ended Dec. 31, 1997, net sales were $138.8 million, compared
to net sales of $220.7 million in 1996. The revenue decline in 1997 was
primarily due to a drop in natural rubber price, weak consumption market and
reduced trading of agricultural products other than rubber. The 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 average per-ton price down in 1997 to $1,160, versus
$1,530 in the comparable 1996 period. Gross profit margins also fell
significantly because of a reduction in the trading of agricultural products which
had made a high gross profit margin contribution in 1996.
The reduction in gross profit, resulting from the decrease in net sales and profit
margins, caused a 49% decrease in net income to $2.2 million for the year
ended Dec. 31, 1997, compared with net income of $4.3 million in 1996.
Basic earnings per share for years ended Dec. 31, 1997 and 1996 were $0.37
and $1.22, based on 5,958,171 and 3,533,512 weighted average number of
common shares outstanding in 1997 and 1996, respectively. Diluted earnings
per share for the years ended Dec. 31, 1997 and 1996 were $0.37 and $1.21,
based on 5,975,622 and 3,575,958 weighted average number of common
shares and dilutive potential common shares outstanding in 1997 and 1996,
respectively. As of April 1, 1998, the company had a total of approximately
6.03 million common shares outstanding.
For the three months ended Dec. 31, 1997, net sales were $30.8 million,
compared with $65.8 million in the comparable 1996 period. Net loss in the
fourth quarter of 1997 was $84,000, compared with net income of $850,000
in the comparable 1996 period. Basic loss per share for the fourth quarter of
1997 was was $0.01, compared with earnings per share of $0.24 in the
comparable 1996 period, based on weighted average number of common
shares of 5,958,171 and 3,533,512 in 1997 and 1996, respectively. Diluted
loss per share for the fourth quarter of 1997 was $0.01, compared with
earnings per share of $0.24 in the comparable 1996 period, based on
5,975,622 and 3,575,958 weighted average number of common shares and
dilutive potential common shares outstanding in 1997 and 1996, 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 financial crisis has led
to sales erosion in 1997. 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
lower selling, general and administrative expenses for the year ended Dec. 31,
1997. The economic problems in Southeast Asia continue, but our
conservative management policy, low gearing, tight financial controls and strong
cash position put us in a very good position to face any possible difficulties.
1998 will be a difficult year. We shall continue to be on the lookout for
opportunities to expand business operations in a prudent manner. Difficult times
may provide an opportunity to find and explore new businesses. Our company
will continue to look for suitable opportunities which can enhance the asset and
earning bases of the company."
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 and liquid latex, and procures production
materials, supplies and other agricultural products. The Hainan Province
supplies approximately 56% of the PRC's natural rubber production.
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 impact of weather, competitive pressures from within the
natural rubber and motorcycle industries, quarterly fluctuations in results,
dividend income receivable, 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.
CHINA RESOURCES DEVELOPMENT INC., AND SUBSIDIARIES
Consolidated Income Statement
(Unaudited)
(Amounts in thousands, except per share data)
Three Months Ended Year Ended
Dec. 31, Dec. 31,
1996 1997 1997 1996 1997 1997
Rmb Rmb (a)U.S.$ Rmb Rmb (a)U.S.$
Net sales 544,992 255,409 30,846 1,827,499 1,149,171 138,789
Income before
income
taxes 24,268 4,131 499 84,326 52,561 6,348
Income
taxes (6,079) (1,839) (222) (13,991) (9,798) (1,183)
Net income
before
minority
interests 18,389 2,292 277 70,335 42,763 5,165
Minority
interests(11,305) (2,986) (361) (34,513) (24,563) (2,967)
Net income 7,084 (694) (84) 35,822 18,200 2,198
Earnings/
(loss) per
share
Basic 2.00 (0.12) (0.01) 10.14 3.05 0.37
Diluted 1.98 (0.12) (0.01) 10.02 3.04 0.37
(a) Based on an exchange rate of U.S.$1.00 = Rmb8.28 on Dec. 31, 1997.
Amounts have been converted from Renminbi to U.S. dollars for
convenience, and no representation is made that Rmb amounts could have
been, or could be, converted into U.S. dollars at the stated rate or
any other rate.
Note: The above results are preliminary and unaudited
CONTACT: China Resources Development Inc.
Edward Wong
011-852-2810-7205 |
