China Resources Reports 1998 Third Quarter Results
13 November 1998
China Resources Reports 1998 Third Quarter Results
HONG KONG--Nov. 12, 1998--China Resources Development Inc. , a leading natural rubber distributor based in the People's Republic of China (PRC), Thursday announced operating results for the third quarter and nine months ended Sept. 30, 1998.
Results have been converted from Renminbi Yuan (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 Sept. 30, 1998 (U.S. $1.00=Rmb8.27).
For the three-month period ended Sept. 30, 1998, net sales were $18.8 million, compared to net sales of $50.7 million in the year-earlier period. The third quarter decline in sales was mainly due to a decrease in natural rubber prices and intense competition from imported natural rubber. The consumption market for materials and supplies remained weak in 1998. The reduction in gross profit and other income from trading of rubber futures contracts caused a net loss of $56,000 for the three-month period ended Sept. 30, 1998, compared to net income of $1.1 million for the corresponding period in 1997. Basic earnings/(loss) per share for the three-month period ended Sept. 30, 1998 and 1997 were ($0.01) and $0.18, based on 5,995,671 and 6,029,004 weighted average number of common shares outstanding for the 1998 and 1997 periods, respectively.
For the first nine months of 1998, net sales were $44.6 million, compared to net sales of $108.1 million in the corresponding 1997 period. The decline in net sales was due to the aforementioned reasons. Net loss for the nine months of 1998 was ($495,000), versus net income of $2.3 million in the corresponding 1997 period. Basic earnings/(loss) per share for the nine months of 1998 and 1997 were ($0.08) and $0.39, based on 6,017,893 and 5,917,893 weighted average number of common shares outstanding for the 1998 and 1997 periods, respectively.
Li Shunxing, president of China Resources Development Inc., commented on the results: "The natural rubber market in China experienced intense competition due to the contraction in demand and the continued decline in natural rubber prices as a result of the devaluation of the major Asian currencies. During the quarter under review, the Chinese markets further deteriorated from the already weak levels of June 30. Chinese economic data for the first six months of 1998 point to a weakening of the Chinese economy. Consequently, the level of uncertainty remains high and markets are likely to remain volatile. In view of the market uncertainties prevailing in Asia and China, our management will continue to utilize prudent management and fiscal policies to run the business and to face any challenges ahead."
China Resources Development Inc., with office in Hong Kong and the Hainan Province of the PRC, through a subsidiary, owns a 61% 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 Statements (Unaudited)
(Amounts in thousands, except share and per share data)
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
1998 1997 1998 1998 1997 1998
RMB RMB US$ RMB RMB US$
SALES 155,122 419,295 18,757 368,489 893,762 44,557
COST OF
SALES (148,944) (410,396) (18,010) (352,948) (860,071) (42,678)
GROSS PROFIT 6,178 8,899 747 15,541 33,691 1,879
DEPRECIATION
OF FIXED
ASSETS (491) (1,195) (59) (1,312) (2,039) (158)
SELLING AND
ADMINISTRATION
EXPENSES (6,110) (6,263) (739) (21,645) (21,979) (2,618)
OPERATING
INCOME/(LOSS) (423) 1,441 (51) (7,416) 9,673 (897)
FINANCIAL
INCOME/
(EXPENSES),
NET 1,728 (859) 209 6,460 31 781
OTHER INCOME,
NET 403 19,981 49 2,021 38,726 244
INCOME BEFORE
INCOME TAXES 1,708 20,563 207 1,065 48,430 128
INCOME TAXES (749) (1,806) (91) (1,802) (7,959) (217)
NET INCOME/
(LOSS) BEFORE
MINORITY
INTERESTS 959 18,757 116 (737) 40,471 (89)
MINORITY
INTERESTS (1,421) (9,979) (172) (3,359) (21,577) (406)
NET INCOME/
(LOSS) (462) 8,778 (56) (4,096) 18,894 (495)
BASIC AND
DILUTED
EARNINGS/
(LOSS) PER
SHARE (0.08) 1.46 (0.01) (0.68) 3.19 (0.08)
WEIGHTED
AVERAGE NUMBER
OF SHARES
OUTSTANDING
5,995,671 6,029,004 5,995,671 6,017,893 5,917,893 6,017,893
Based on an exchange rate of U.S. $1.00=Rmb8.27 on Sept. 30,
1998. 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.