Second Quarter Fiscal Year 2008
Results
Revenue for the three months ended February
29, 2008 was $5.9 million, down 13.6%
from $6.8 million for the same period
in 2007. The decrease in revenue was due
to unusual heavy snow in southern and
eastern China during January and February
that disrupted the Company¡¯s manufacturing
activities. Anhui province, where the
production line of Runji is located, was
one of the seriously paralyzed areas in
China, leading to a temporary production
suspension for 47 days due to power outages
and road closures.
Gross profit for the second quarter of
2008 totaled $0.93 million, up 9.8% compared
with $0.85 million for the same period
last year. Gross profit margin was 15.8%
for the second quarter of 2008, up from
12.5% for the same quarter of 2007. Higher
gross margin was attributed to a higher
market price for cement and lower production
costs.
Operating income for the second quarter
2008 was $0.5 million, flat with the second
quarter of 2007. Operating margin was
8.3%, compared to 7.2% in the same quarter
of 2007.
Net income for the second quarter of
2008 was $0.9 million, or $0.01 per fully
diluted share, up 411.8% from net income
of $0.2 million, or $0.00 per fully diluted
share, in the second quarter of 2007.
Net margin for the period grew to 14.4%
from 2.4% in second quarter 2007.
¡°Despite the slight decrease in revenue
due to the adverse weather effect, we
are pleased to achieve significantly higher
margins and net income in the quarter,¡±
stated Mr. Shouren Zhao, CEO of China
Runji Cement Inc.. ¡°Over the last year,
we have ramped up production to full capacity
to meet strong market demand, resulting
in lower per unit operating costs and
higher margins. In addition, our dedication
to improving oversight and manufacturing
efficiency has clearly been effective
in improving our bottom line. Although
we effectively had 47 fewer days than
normal for the quarter, we are pleased
with our overall results.¡±
Six Month Results
For the six months ended February 29,
2008, revenues were $16.2 million, up
13.7% from $14.3 million for the same
period last year. Gross profit was $3.5
million, up 101.4% from $1.7 million for
the same period 2007. Gross margin was
21.3%, a significant increase from 12.0%
in the same period a year earlier. Operating
income was $2.5 million, up 146.8% from
$1.0 million for the same period in fiscal
year 2007; operating margin was 15.5%
and 7.2% for the first six months in 2008
and 2007, respectively. Net income increased
761.0% to $2.3 million, or $0.03 per fully
diluted share, from $0.3 million, or $0.00
per fully diluted share in the first half
of fiscal 2007.
Financial Condition
For the six months ended February 29,
2007, the Company had $0.2 million in
cash and cash equivalents, $3.7 million
in working capital and a current ratio
of 1.40. Runji had $0.4 million in short-term
loans payable and $16.4 million in shareholders'
equity. The Company¡¯s cash flows from
operations in the 6-months of financial
year 2008 was $0.6 million. To date, Runji
has funded most of its cash needs with
loans from related parties.
Business Outlook
As the demand for high grade cement continues
to outpace the growth in supply, Runji
foresees steady growth in its business
activities. The Company is the only supplier
of PII52.5 cement, China¡¯s highest grade
of cement, in northern Anhui Province.
Furthermore, Anhui¡¯s annual growth rate
of 11%, which is above the national average,
has translated into an abundance of construction
projects, particularly large-scale government
sponsored infrastructure projects which
demand the high quality cement.
¡°With a current output of 2,500 tons
of cement per day, our production facilities
are operating at full capacity,¡± said
Zhao. ¡°To address this, construction of
a new production line to double our current
capacity is well underway and expected
to be on line by August of this year.
We are also constructing a waste heat-powered
electric generator which is expected to
be put into use at roughly the same time,
further reducing operating costs and increasing
margins. With this added capacity, combined
with our prime location in one of China¡¯s
most quickly developing provinces and
our role as the only supplier of high
grade PII25.2 cement in the region, we
expect to see aggressive growth in sales
going forward.¡±
For the full year fiscal year 2008 ending
August 30, Runji is expecting to achieve
revenues of $37 million and net income
of $5.2 million, or $.07 per fully diluted
share. These figures are expected to increase
significantly for fiscal year 2009 due
do the contributions of a second production
line.
About China Runji Cement, Inc.
Founded in 2003, China Runji Cement, Inc.
is one of the leading players in cement
production and distribution. In October
2007, the Company became a U.S. public
company following the completion of a
share exchange with Fitmedia Inc. The
Company¡¯s certified manufacturing facilities
containing cutting-edge technology and
advanced equipment and are capable of
producing as much as 1 million tons of
cement annually. Furthermore, the Company¡¯s
solid distribution network and customer-orientated
services have earned Runji¡¯s products
a superior reputation among its customers.
Headquartered in Anhui Province, the Company¡¯s
markets include major local cities such
as Hefei, Nanjing, and Liu¡¯an.
For more information on
the Company and its products, please visit
http://www.chinarunji.com/index.asp.
Safe Harbor Statement
This press release contains certain statements
that may include 'forward-looking statements'
as defined in the Securities Act of 1933,
and the Securities Exchange Act of 1934.
All statements, other than statements
of historical facts, included herein are
'forward-looking statements'. Although
the Company believes that the expectations
reflected in these forward-looking statements
are reasonable, they do involve assumptions,
risks and uncertainties, and these expectations
may prove to be incorrect. You 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, including those
discussed in the Company's periodic reports
that are filed with and available from
the Securities and Exchange Commission.
All forward-looking statements attributable
to the Company or persons acting on its
behalf are expressly qualified in their
entirety by these factors. Other than
as required under the securities laws,
the Company does not assume a duty to
update these forward-looking statements.
