OREANDA-NEWS. November 20, 2012. China Shengda Packaging Group Inc. announced its financial results for the three months ended September 30, 2012. Revenues decreased 1.8% to USD 33 million from USD 33.6 million in the prior year period. The decrease was attributable to the decrease of sales volume, partially offset by the increase in average prices per square meter, as the company said in a press release received by Lesprom Network.

Sales volume decreased by 3.2 million square meters, or 3.6%, to 84.4 million square meters for the three months ended September 30, 2012, from 87.6 million square meters for the same period of 2011. The decreased sales volume was mainly the result of the challenges associated with unfavorable domestic and foreign economic environment, which adversely affected the business of many customers. The average price per square meter increased by 1.9% to \\$0.39 for the three months ended September 30, 2012 from USD 0.38 in the same period of 2011.

Gross profit remained largely the same at USD 6 million as in the same period of 2011. Gross profit from flexo cartons decreased 1.5% to USD 3.8 million for the three months ended September 30, 2012, from USD 3.9 million for the same period of 2011. Gross profit from color cartons increased 7.4% to USD 2.1 million for the three months ended September 30, 2012, from USD 2.0 million for the same period of 2011. Gross margin was 18.2% for the three months ended September 30, 2012, as compared to 17.7% for the same period of 2011. The flat gross profit was mainly due to the 2.4% decrease in cost of goods sold associated with decreased sales volume compared to the same period last year.

Income tax expense was largely flat at USD 0.4 million for the three months ended September 30, 2012.

Net income attributable to common stockholders decreased 41.1% to USD 1.4 million, or USD 0.04 per diluted share, from USD 2.3 million, or USD 0.06 per diluted share, in the same period of 2011.

"The 3Q results were below our expectations due to slack demand resulting from macroeconomic headwinds faced by our customers. Although this led to a decline in both sales volume and revenues, we managed to control raw material costs, largely maintain pricing, and improve sales mix in favor of higher-margin color cartons. We therefore achieved higher gross margin both sequentially and on a year-over-year basis. However, we continued to face a challenging and competitive business environment that required increased sales and marketing spending making it harder to control operating expenses," said Mr. Daliang Teng, CEO of China Shengda Packaging.

Revenue for the first nine months of 2012 was USD 98.2 million, up 5.4% from revenue of USD 93.2 million for the first nine months of 2011, mainly due to increased sales volume. The sales volume increased 7.6 million square meters, or 3.2%, to 249 million square meters from 241.4 million square meters during the same period of 2011. Gross profit was USD 17.3 million, compared to USD 19.2 million for the nine months of 2011. Gross margin was 17.7%, compared to 20.6% for the first nine months of 2011. Net income attributable to the Company's common stockholders was USD 4.5 million, or USD 0.12 per diluted share, compared to USD 8.0 million, or USD0.20 per diluted share, for the same period a year ago.

For fiscal 2012, China Shengda Packaging maintains its expectations for revenues of between USD 115 million and USD 125 million. However, the Company now expects net income of between USD5.5 million and USD 6.5 million and diluted earnings per share of between USD 0.14 and USD0.17, lower than its previous estimates of net income of between USD 6.5 million and USD 7.5 million, and diluted earnings per share of USD 0.17 and USD 0.19.

China Shengda Packaging Group Inc. is a leading paper packaging company in China. It is principally engaged in the design, manufacturing and sale of flexo-printed and color-printed corrugated paper cartons in a variety of sizes and strengths. It also manufactures corrugated paperboards, which are used for the production of its flexo-printed and color-printed cartons.