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General Steel Holdings Announces Record Third Quarter 2007 F

BEIJING, Nov. 15 /Xinhua-PRNewswire-FirstCall/ -- General Steel Holdings, Inc. ("General Steel") (“The Company”) (Amex: GSI), one of China’s leading non-state owned steel products producer; today announced its results for the third quarter which ended September 30, 2007.

Financial Highlights

-- Revenue increased 636% to $345.4 million

-- Net Income increased to $8.0 million, or $0.25 in EPS

-- YTD Revenues reached $504 million, Net Income of $10.4 million and

$0.33 in EPS

Achievements

-- Approved for listing on American Stock Exchange

-- Received tax rate reduction for Longmen Joint Venture

-- Longmen Joint Venture acquired controlling interest in two companies

“As the first full quarter of reporting for all three of our subsidiaries, we are indeed happy to deliver to our shareholders record revenue and profit results. This is a strong confirmation to us that our aggregation strategy in the China steel industry is yielding significant fruit” state Henry Yu, CEO and Chairman of General Steel. He further commented, “We were also pleased this quarter to receive qualification approval from the National Development Reform Commission (NDRC) for the “Go West” special tax treatment lowering our effective tax rate at the Longmen Joint Venture from 33% to 15%. A capstone event of the quarter was our approval to list on the American Stock Exchange. All-in-all, we are very pleased to offer our shareholders the results of this quarter.”

Third Quarter Financial Results

Note: This is the first full quarter of reporting for the Longmen Joint Venture and the Baotou Steel Pipe Joint Venture.

Net sales for the third quarter of 2007 increased 636% to $345.4 million compared to $47.0 million for the same quarter in 2006. The Company produced and shipped 814,456 tons in aggregate, representing a 641% increase compared to 109,912 tons during the third quarter of 2006. Cost of sales for the three months ended September 30, 2007 increased 604% to $319.5 million compared to $45.4 for the same period in 2006.

Quarterly gross profit for the third quarter of 2007 was $25.9 million, an increase of approximately 1566% or $24.3 million from $1.6 million for the same period last year. Gross margins increased to 7.5% from 3.3% for the third quarter of 2007 and 2006 respectively. Selling, general and administrative expenses were $6.8 million for the three months ended September 30, 2007, compared to $0.61 million for the same period of 2006. Net income for the 2007 third quarter increased significantly to $8.0 million, representing earnings per share of $.25, from $0.18 million in net income, or $.01 per share during the third quarter of 2006.

Nine Month Financial Results

Net sales increased approximately 420% to $504.2 million for nine months ended September 30, 2007, as compared to $97 million for the same period last year. Gross profit for the nine months ended September 30, 2007 was approximately $35.7 million, an increase of 692% or $31.2 million from $4.5 million for the same period last year. Gross profit margin increased to 7.1 percent from 4.7 percent for the nine months ended September 30, 2007 and 2006. Operating income for the nine months ended September 30, 2007 was $25.4 million, increased more than ten-fold from the $2.3 million reported in the same period of 2006. Net income was $10.4 million for the nine months that ended September 30, 2007, compared with $0.52 million in the same period last year, an increase of $9.9 million, or approximately 1899%. This equated to earnings of $.33 per share compared to $.02 per share for the first nine months of 2006.

"We have reached a true inflection point in our business, which is the culmination of hard work, prudent planning and solid execution on behalf of our entire organization. “The underlying growth dynamics and fundamentals in the steel industry provide further confirmation that our business model, of finding solid cash constrained steel companies with strong management, is not only sustainable, but scalable. We have confidence in our ability to deliver significant growth on a go forward basis as we identify and capitalize on these accretive transactions and continue to derive the economic benefits of full integration on our completed joint ventures,” Mr. Yu concluded.

Conference Call

Management will host a conference call to discuss its third quarter 2007 financial results at 9:00 a.m. EST on Thursday, November 15, 2007. To access the conference call, dial 800-860-2442, pass code for ALL callers: General Steel Earnings Call. This call is being webcast by MultiVu a PR Newswire Company and can be accessed by clicking on this link http://www.videonewswire.com/event.asp?id=43996 .

About General Steel Holdings, Inc.

General Steel Holdings, Inc., headquartered in Beijing, operates a diverse portfolio of Chinese steel companies. With 3 million tons aggregate production capacity, its companies serve various industries and produce a variety of steel products including reinforced bar (rebar), hot-rolled carbon and silicon sheet and spiral-weld pipe. The Company has steel operations in Shaanxi province (central China), Inner Mongolia autonomous region (northwest China) and Tianjin municipality (northeast China).

Information Regarding Forward-Looking Statements

Certain statements in this news release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements which will be made are based on management’s current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Such forward-looking statements may be affected by inaccurate assumptions or by known or unknown risks or uncertainties. Actual results may vary materially from those expressed or implied by the statements herein. For factors that could cause actual results to vary, perhaps materially, from these forward-looking statements, please refer to the Company’s Form 10-K, filed with the Securities and Exchange Commission, and other subsequent filings. Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.

GENERAL STEEL HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2007 AND DECEMBER 31, 2006

ASSETS

September 30, December 31,

2007 2006

(Unaudited)

CURRENT ASSETS:

Cash $6,781,439 $6,831,549

Restricted cash 10,073,014 4,231,523

Accounts receivable, net of

allowance for doubtful accounts of

$142,694 and $137,132 as of September

30, 2006 and December 31, 2006,

respectively 18,522,393 17,095,718

Accounts receivable - related

parties 12,436,638 --

Notes receivable 14,816,424 537,946

Other receivables 2,246,237 268,784

Other receivables - related parties 1,334,000 850,400

Inventories 74,116,266 12,489,290

Advances on inventory purchases 60,350,015 2,318,344

Advances on inventory purchases -

related parties 24,662,603 --

Prepaid expenses - current 470,166 46,152

Total current assets 225,809,195 44,669,706

PLANT AND EQUIPMENT, net 207,347,239 26,606,594

OTHER ASSETS:

Advances on equipment purchases 211,431 --

Prepaid expenses - non current 846,755 740,868

Intangible assets - land use right,

net of accumulated amortization 21,324,413 1,804,440

Total other assets 22,382,599 2,545,308

Total assets $455,539,033 $73,821,608

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable $96,096,557 $3,001,775

Accounts payable - related parties 725,131 --

Short term loans - bank 76,267,448 30,284,686

Short term loans - others 37,151,900 --

Short term loans - related parties 19,376,350 --

Short term notes payable 41,247,280 8,153,520

Other payables 6,650,517 355,142

Other payable - related parties 15,461,042 --

Accrued liabilities 7,936,729 1,064,012

Customer deposits 50,909,808 1,093,602

Deposits due to sales

representatives 1,795,297 2,051,200

Taxes payable 16,760,169 5,391,602

Investment payable 6,403,200 --

Distribution payable to minority

shareholder 2,744,676 --

Shares subject to mandatory

redemption -- 2,179,779

Total current liabilities 379,526,104 53,575,318

MINORITY INTEREST 36,582,894 6,185,797

SHAREHOLDERS’ EQUITY:

Preferred stock, $0.001 par value,

50,000,000 shares authorized,

3,092,899 and 0 shares

issued and outstanding as of

September 30, 2007 and December

31, 2006, respectively 3,093 --

Common Stock, $0.001 par value,

200,000,000 shares authorized,

34,564,665 and 32,426,665

shares (including 1,176,665

redeemable shares) issued

and outstanding as of

September 30, 2007 and

December 31, 2006, respectively 34,565 31,250

Paid-in-capital 22,857,207 6,871,358

Retained earnings 13,154,645 4,974,187

Statutory reserves 1,107,010 1,107,010

Accumulated other comprehensive

income 2,273,515 1,076,688

Total shareholders’ equity 39,430,035 14,060,493

Total liabilities and

shareholders’ equity $455,539,033 $73,821,608

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND OTHER

COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER

30, 2007 AND 2006

(Unaudited)

Three months ended

September 30,

2007 2006

REVENUES $345,384,337 $46,957,797

COST OF SALES 319,494,586 45,404,450

GROSS PROFIT 25,889,751 1,553,347

SELLING, GENERAL AND ADMINISTRATIVE

EXPENSES 6,795,307 605,801

INCOME FROM OPERATIONS 19,094,444 947,546

OTHER EXPENSE, NET 2,916,768 623,105

INCOME BEFORE PROVISION FOR INCOME

TAXES 16,177,676 324,441

AND MINORITY INTEREST

PROVISION FOR INCOME TAXES 2,025,389 --

NET INCOME BEFORE MINORITY INTEREST 14,152,287 324,441

LESS MINORITY INTEREST 6,151,792 144,644

NET INCOME 8,000,495 179,797

OTHER COMPREHENSIVE INCOME:

Foreign currency translation

adjustments 374,568 222,417

COMPREHENSIVE INCOME $8,375,063 $402,214

WEIGHTED AVERAGE NUMBER OF SHARES 32,343,332 31,250,000

EARNING PER SHARE, BASIC AND DILUTED $0.25 $0.01

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND OTHER

COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER

30, 2007 AND 2006

(Unaudited)

Nine months ended

September 30,

2007 2006

REVENUES $504,247,052 $96,998,657

COST OF SALES 468,510,928 92,486,613

GROSS PROFIT 35,736,124 4,512,044

SELLING, GENERAL AND ADMINISTRATIVE

EXPENSES 10,269,918 2,155,612

INCOME FROM OPERATIONS 25,466,206 2,356,432

OTHER EXPENSE, NET 4,378,586 1,370,798

INCOME BEFORE PROVISION FOR INCOME

TAXES 21,087,620 985,634

AND MINORITY INTEREST

PROVISION FOR INCOME TAXES 3,359,271 --

NET INCOME BEFORE MINORITY INTEREST 17,728,349 985,634

LESS MINORITY INTEREST 7,359,688 466,834

NET INCOME 10,368,661 518,800

OTHER COMPREHENSIVE INCOME:

Foreign currency translation

adjustments 1,196,827 405,053

COMPREHENSIVE INCOME $11,565,488 $923,853

WEIGHTED AVERAGE NUMBER OF SHARES 31,704,912 31,250,000

EARNING PER SHARE, BASIC AND DILUTED $0.33 $0.02

For more information, please contact:

Ross Warner

General Steel Holdings, Inc.

Tel: +86-10-5879-7346 (Beijing)

Email: ross@gshi-steel.com

Skype: ross.warner.generalsteel

Matthew Hayden

HC International, Inc.

Tel +1-858-704-5065

Email: matt@haydenir.com

Web: http://hcinternational.net

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