updated 11/16/2010 7:17:05 AM ET 2010-11-16T12:17:05

NEW YORK, Nov. 16, 2010 (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 overall producers of carbon and graphite products, today reiterated its financial results for its third-quarter ended September 30, 2010.

Third Quarter 2010 Highlights

  • Revenue was $9,979,707, up 78.8% from the same quarter of 2009.
     
  • Gross profit was $2,474,084, up 62.2% from the third quarter of 2009 with gross margin of 24.8%, slightly decreased 2.5% from 27.3% for the third quarter of 2009.
     
  • Net income was $1,900,563, an increase of $965,298 or 100% from the third quarter 2009, and earnings per diluted share were $0.09 based on 21,435,161 shares.

Third Quarter 2010 Results

"We are pleased to announce solid financial results and robust growth in the quarter," Donghai Yu, CEO of the Company commented. "Our Third Quarter results came in strong as anticipated, we experienced 78.8% growth in our revenues year over year. Due to our long production cycle, in the quarter, we began to deliver most of the orders we received at the beginning of this year. We expect to see increased demand in higher margin ultra purity graphite electrode, fine grain and high purity graphite product lines. We see this demand extending through 2010 and into 2011, primarily due to anticipated growth in the automobile, aerospace, defense, iron and steel industries in China. Thus far, in 2010, we have doubled our capacity from 15,000 tons to 30,000 tons. We have also begun construction on a new 30,000 ton facility to meet the increasing demands of our customers. Additionally, we have sufficient capital to fund all of our raw material needs for our new capacity expansion through our RMB 180 million loan from China Construction Bank."

"We have recently increased our customer base and expect to establish long term relationships with each new customer. In turn we believe this will further strengthen our robust revenue growth in the future," Mr. Yu continued.

Three Months Ended September 30, 2010 and 2009

During the three months ended September 30, 2010, we had sales of $9,980,000, as compared to sales of $5,581,000, for the three months ended September 30, 2009, an increase of $4,399,000, or approximately 78.82%. Our revenue was generated mainly from sales of fine grain graphite, graphite blanks and semi-processed graphite products. Sales increase was attributable primarily to new customer development and market recovery.

For the three months ended September 30, 2010, four customers accounted for 10% or more of sales revenues, representing 34.0%, 25.0%, 14.0%, and 11.0%, respectively of the total sales.  As of September 30, 2010, there were two customers that constitute 23.3% and 14.3% of the accounts receivable. As of December 31, 2009, there were three customers that accounted for 17.6%, 15.4% and 14% respectively of the accounts receivable.

During the three months ended September 30, 2010, our cost of sales was $7,506,000, as compared to $4,056,000, during the three months ended September 30, 2009, an increase of $3,450,000, or 85.05%. As a result, our gross profit increased $949,000, or 62.25%, for the three months ended September 30, 2010. Our gross margin decreased from 27.32% for the three months ended September 30, 2009 to 24.79% for the three months ended September 30, 2010. The decrease was associated with change in product mix. We increased sales of semi-processed graphite products that have lower gross margin.

Net income available for common shareholders was $1,900,000, or $0.09 per share (basic and diluted), for the three months ended September 30, 2010 compared to net income of $935,000, or $0.06 per share (basic and diluted), for the three months ended September 30, 2009.

Nine Months Ended September 30, 2010 and 2009

During the nine months ended September 30, 2010, we had sales of $18,075,000, as compared to sales of $12,132,000, for the nine months ended September 30, 2009, an increase of $5,943,000, or approximately 48.99%. We experienced a significant increase in the demand during the nine months ended September 30, 2010 resulting from the global economic recovery and new client's development.

For the nine months ended September 30, 2010, two customers accounted for 10% or more of sales revenues, representing 25.7% and 23.6%, respectively of the total sales. 

During the nine months ended September 30, 2010, our cost of sales was $14,348,000, as compared to $9,013,000, during the nine months ended September 30, 2009, an increase of $5,335,000, or 59.19%. As a result, our gross profit increased $608, or 19.49%, for the nine months ended September 30, 2010. Our gross margin decreased from 25.71% for the nine months ended September 30, 2009 to 20.62% for the nine months ended September 30, 2010. The decrease of gross profit is due to the variance in production mix as in the nine month ended September 30, 2010 more semi-processed products are sold.

Net income available for common shareholders was $1,578,000, or $0.08 per share (basic and diluted), for the nine months ended September 30, 2010 compared to net income of $1,836,000, or $0.13 per share (basic and diluted), for the nine months ended September 30, 2009.

Financial condition

Net cash flow used in operating activities was $6,303,257 in the first three quarters of 2010 as compared to net cash flow provided by operating activities of $7,274,088 in the first three quarters 2009, a decrease of $13,577,345. The decrease is mainly due to increased advance to suppliers.

Net cash flow used in investing activities was $8,874,952 for the first three quarters of 2010 and $4,073,835 for the first three quarters of 2009. The increase is mainly because in the first three quarters 2010, approximately $5 million was used in acquisition of land use rights in connection with the construction of our new plants.

Net cash flow provided by financing activities was $20,959,505 for the first three quarters of 2010, compared to $2,690,362 provided by financing activities for the first three quarters of 2009.  The increase is mainly due to increased loan and an equity financing.

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  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.

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