China Resources reports 1997 first quarter earnings.HONG KONG--(BUSINESS WIRE)--May 20, 1997-- Net Income Increases 35% China Resources China Resources (Chinese: 華潤; HKSE: 0291 ) is a group of companies in wide variety of business in Hong Kong and mainland China. Some of its companies use the name the acronym CRC. Development, Inc. (Nasdaq: CHRB CHRB California Horse Racing Board CHRB Community Housing Resource Board (Montana) CHRB Commonwealth Health Research Board ), a leading natural rubber distributor based in the People's Republic People's Republic n. A political organization founded and controlled by a national Communist party. of China (PRC), today announced operating results for the first quarter ended March 31, 1997. Results have been converted from Renminbi (the lawful Licit; legally warranted or authorized. The terms lawful and legal differ in that the former contemplates the substance of law, whereas the latter alludes to the form of law. A lawful act is authorized, sanctioned, or not forbidden by law. 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 The People's Bank of China (PBC or PBOC) (Simplified Chinese: 中国人民银行; Traditional Chinese: on March 31, 1997 (U.S. $1.00=Rmb8.30). For the three-month period ended March 31, 1997, net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight were $13.2 million, compared to net sales of $30.7 million in the year-earlier period. The first quarter decline in sales was mainly due to a strategic agency arrangement undertaken at the beginning of 1997 to assign a portion of the Company's sales to the Hainan Farming Bureau (HFB HFB Horn-Fed Bowtie (antenna) HFB heptafluorobutyryl HFB Hooray for Boobies (Bloodhound Gang album) HFB Hit From Behind HFB High Frequency Broadcast HFB High Frequency Bipolar ) in order to reduce the Company's exposure to a drop in natural rubber prices. The domestic natural rubber market has been weak in 1997 due to an excess supply resulting from an inventory backlog, an increase in imported rubber and a worldwide decrease in rubber prices. Despite the decrease in sales, for the quarter ended March 31, 1997, net income increased approximately 35% to $407,000 or $0.07 per share, compared with net income of $300,723, or $0.21 per share, in the 1996 period. Per share results are based on 5,673,186 and 1,439,683 weighted average shares and common stock equivalents outstanding for the 1997 and 1996 periods, respectively. The weighted average share count increase reflects the impact of conversions into common stock of the Company's Series B Convertible Preferred Stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". , 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. Gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. increased during the 1997 first quarter to 7.6%, compared to 5.5% in the year-earlier quarter. The profit margin improvement was primarily a result of the Company's decision to emphasize procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. of products with higher gross margin contributions, such as fuels, chemicals, fertilizers and pesticides, and to reduce its procurement of those items providing a lower gross margin such as construction and building materials Building materials used in the construction industry to create . These categories of materials and products are used by and construction project managers to specify the materials and methods used for . . Margins were also enhanced by gains from the Company's rubber futures hedges designed to reduce the carrying cost Noun 1. carrying cost - the opportunity cost of unproductive assets; the expense incurred by ownership carrying charge opportunity cost - cost in terms of foregoing alternatives of natural rubber. China Resources Development, Inc. President Li Shunxing, commented on the results, "Across-the-board margin improvements due to our ongoing focus on procurement of higher margin agricultural products, a significant drop in net financial expenses (in which all of the Company's outstanding bank loans and certain accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying from the farms and certain HFB affiliates were re-assigned to the HFB) pursuant to our 1996 fourth quarter restructuring efforts, a 25 percent reduction in sales, general and administrative expenses also stemming from the restructuring, as well as our HFB agency agreement and successful rubber hedging, all contributed to a 35% net income improvement for the period, traditionally our slowest quarter of the year." Mr. Li concluded, "We are particularly pleased with our ability to react quickly to a challenging rubber market, by taking advantage of our HFB agency arrangement. Despite a period in which natural rubber prices fell approximately 10 percent, and were about 25 percent lower than the comparable 1996 period, under our HFB agency arrangement, we were successful in mitigating the price risk and holding costs generally associated with maintaining a large rubber inventory. The Company received a fixed commission on natural rubber sales arranged through its extensive sales network, and recorded the commissions earned from these agency sales under other income, the main reason for our lower year-over-year sales results." China Resources Development, Inc., with offices in Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. 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 latex, emulsion of a polymer (e.g., rubber) in water (see colloid). Natural latexes are produced by a number of plants, are usually white in color, and often contain, in addition to rubber, various gums, oils, and waxes. 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties, including, but not limited to 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. REMINDER: China Resources Development management will conduct a conference call to discuss 1997 first quarter earnings results on Tuesday, May 20, 1997 at 11:00 a.m. (EST EST electroshock therapy. EST abbr. electroshock therapy ). The dial-in numbers are 212/346-0127 or 415/904-7303. -0-
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
Condensed Consolidated Income Statement
(Amounts in thousands, except share and per share data)
Three Months Ended
March 31,
1997 1996 1997
RMB RMB US$(a)
(unaudited)
Sales 109,398 255,120 13,181
Cost of sales (101,118) (241,021) (12,183)
Gross profit 8,280 14,099 998
Depreciation of fixed assets (334) (595) (40)
Selling and administrative expenses (7,459) (9,986) (899)
Operating income 487 3,518 59
Financial income (expenses), net 647 (5,189) 78
Other income 8,810 9,338 1,061
Income before income taxes 9,944 7,667 1,198
Income taxes (2,126) (1,991) (256)
Net income before minority interests 7,818 5,676 942
Minority interests (4,437) (3,180) (535)
Net income 3,381 2,496 407
Earnings per share(b) 0.60 1.73 0.07
Weighted average number of
common and common stock
equivalent shares outstanding(b) 5,673,186 1,439,683 5,673,186
(a) Based on an exchange rate of U.S. $1.00=Rmb8.30 on March 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.
(b) Adjusted for a one-for-ten reverse stock split of the
Company's outstanding common stock that was effective on
December 31, 1996.
CONTACT: Edward Wong Edward Wong (born 14 November, 1972 in Washington, D.C.) is an American journalist and a foreign correspondent for The New York Times. He started out as an intern in 1998 and eventually worked at the Metro, Sports, and Business desks. Financial Controller 011/852/28107205 or fc@chrb.com or Joseph N. Jaffoni, Robert L. Rinderman Jaffoni & Collins Incorporated 212/505-3015 or jciir@aol.com |
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