NEW YORK, May 13 /PRNewswire-FirstCall/ -- Gushan Environmental EnergyLimited ('Gushan' or the 'Company'; NYSE: GU), China's largest producer ofbiodiesel as measured by annual production capacity, today announced itsunaudited financial results for the first quarter ended March 31, 2008.
Highlights for First Quarter 2008
-- Total revenues increased by 45.0% compared to the first quarter of 2007 -- Income from operations increased by 49.2% compared to the first quarter of 2007 -- Net income increased by 54.7% compared to the first quarter of 2007 -- Sales volume of biodiesel increased by 19.1% compared to the first quarter of 2007 -- Average selling price of biodiesel increased by 25.0% compared to the first quarter of 2007
(in US$ thousands, except per share data) For the Three Month Period Ended March 31 2007 2008
Revenues 32,732 47,469 Gross profit 13,657 19,835 Income from operations 11,707 17,467 Net income 10,247 15,854 Diluted earnings per share 0.075 0.095 Diluted earnings per ADS 0.150 0.190 Gross profit margin (Note 1) 41.7% 41.8% Net income margin (Note 2) 31.3% 33.4% Sales volume of biodiesel Tons 43,457 51,761 ASP of biodiesel RMB/ton 4,411 5,512 Sales volume of biodiesel by-products Tons 5,096 6,074 ASP of biodiesel by-products RMB/ton 7,421 7,824
Note 1: Gross profit margin is defined as gross profit divided by revenues
Note 2: Net income margin is defined as net income divided by revenues
'Continued strong demand for diesel fueled by China's fast growingeconomy, increased production capacity and higher diesel prices propelledGushan to impressive results for the first quarter of 2008,' said Jianqiu Yu,Chairman and Principal Executive Officer of Gushan. 'During the quarter, thecompany opened its Beijing plant, adding 50,000 tons, or 15 million gallons,to our annual production capacity and raising Gushan's total annual productioncapacity to 240,000 tons, or approximately 72 million gallons. That increasedcapacity, together with significant increases in diesel selling pricesreflecting strong local demand, rising global prices and the company's successat expanding sales of its biodiesel products to the chemical industry, allowedus to achieve strong growth in both sales and income despite increases in rawmaterial prices in line with rising transportation and labor costs in China.'
Financial Results for the First Quarter 2008
Revenues
The Company's revenues increased by 45.0% from RMB229.5 million for thefirst quarter of 2007 to RMB332.9 million (US$47.5 million) for the firstquarter of 2008. During the same period, its sales volume of biodiesel andbiodiesel by-products increased by 8,304 tons and 978 tons, representing anincrease of 19.1% and 19.2%, respectively. The growth in revenues was due toan increase in sales volume and to an increase in the average selling price ofthe Company's biodiesel and biodiesel by-products, respectively, from RMB4,411and RMB7,421 per ton in the first quarter of 2007 to RMB5,512 (US$786.1) andRMB7,824 (US$1,115.8) per ton in the first quarter of 2008, representing anincrease of 25.0% and 5.4% respectively.
The increase in sales volume was principally attributed to thecommencement of operations at our Beijing plant, which added an additional50,000 tons (or approximately 15 million gallons) to the Company's annualbiodiesel production capacity since January 2008, and an increase of 20,000tons (or approximately 6 million gallons) in the annual production capacity ofSichuan Gushan since the fourth quarter of 2007. Sales volume of Fujian andHebei plants remained stable at their full capacity.
The increase in the average selling price of biodiesel was attributed toan increase in the retail selling price of diesel, resulting from an increasein the guidance price of diesel set by the PRC government in November 2007coupled with continuing shortage of diesel supply in China, and thecommencement of sales in March 2008 of some Gushan's biodiesel to chemicalcompanies at higher selling prices than those prevailing in the diesel market.
Cost of Revenues
Cost of revenues for the first quarter of 2008 totaled RMB193.8 million(US$27.6 million), an increase of RMB60.0 million (US$8.5 million) or 44.8%,compared to RMB133.8 million for the first quarter of 2007. This increase wasprimarily attributable to increases in the Company's production volume andoverall average unit costs for vegetable oil offal and used cooking oil whichincreased from RMB1,863 per ton in the first quarter of 2007 to RMB2,287(US$326.2) per ton in the first quarter of 2008 as a result of increasedtransportation costs due to the snow storm in January this year and generalcost inflation, particularly in labor and transportation, in China.
Gross Profit
The Company's gross profit for the first quarter of 2008 totaled RMB139.1million (US$19.8 million), an increase of RMB43.3 million (US$6.1 million), or45.2%, compared to RMB95.8 million in the first quarter of 2007. The Company'sgross margin increased slightly to 41.8% for the first quarter of 2008, upfrom 41.7% for the corresponding quarter of 2007.
Research and Development Expenses
Research and development expenses totaled RMB0.5 million (US$0.1 million)in the first quarter of 2008, a decrease of 44.4% from RMB0.9 million for thefirst quarter of 2007. This decrease was primarily due to the fact that theCompany purchased more chemical materials for research purposes last year.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the first quarter of 2008totaled RMB16.2 million (US$2.3 million), an increase of 26.6% from RMB12.8million for the first quarter of 2007. The increase was mainly due to anincrease in non-cash share-based compensation of RMB1.4 million (US$0.2million) as a result of the share options granted in December 2007 and March2008, an increase in staff costs of RMB1.3 million (US$0.2 million) and anincrease in other expenses of RMB2.7 million (US$0.4 million), both mainly dueto the commencement of full operations at the Beijing plant and the additionof offices in Shanghai, Chongqing and Hunan. The increases were partly offsetby a decrease in professional fees of RMB2.0 million (US$0.3 million).
Other Income (Expense)
Interest income increased to RMB11.0 million (US$1.6 million) for thefirst quarter of 2008 from RMB0.6 million for first quarter of 2007. Theincrease was mainly generated from interest earned on the net proceeds of ourinitial public offer in December 2007.
