KEYUAN PETROCHEMICALS, INC. 
By NINGBO, China, Oct. 4, 2013 /PRNewswire-FirstCall/ -- Keyuan Petrochemicals Inc. (OTCQB: KEYP), ("Keyuan" or "the Company"), an independent manufacturer and supplier of various petrochemical products in China, today announced the Company's financial results for the quarter ended June 30(th), 2013.
"Although our sales volume was negatively impacted by the 40-day facilities shutdown for the thorough routine inspection and maintenance that generally occurs every two years," commented Mr. Chunfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals Inc. "I believe that with our healthy backlog of sales and a clear growth strategy, Keyuan's core earnings potential will improve in the next quarter and going forward."
Financial Summary
Q2 2013 Q2 2012 Chg. 1H 2013 1H 2012 Chg.
------- ------- ---- ------- ------- ----
Sales $94M $184M (49)% $304M $368M (17)%
----- ---- ----- ---- ----- ----- ----
Gross
Profit $2.6M $6.4M (59)% $11M $16M (31)%
------- ----- ----- ---- ---- ---- ----
Net
Income/
(Loss)
(a) $(0.5)M $1.1M (147)% $2.4M $2.9M (17)%
------- ------- ----- ----- ----- ----- ----
EPS
(Diluted) $(0.01) $0.02 (150)% $0.04 $0.05 (20)%
---------- ------ ----- ----- ----- ----- ----
Diluted
Shares
O/S 57.6M 63.0M - 63.0M 63.0M -
------- ----- ----- --- ----- ----- ---
(a) Net Income/(Loss) attributable to KEYP common stockholders.
Sales for the three months ended June 30, 2013 were approximately $94 million, compared to $184 million for the three months ended June 30, 2012, a decrease of $90 million, or 48.9%. The substantial decrease was mainly due to the decrease in sales volume as a result of production interruptions in the quarter, which resulted in 98,000 metric tons of lost production. Production interruptions were caused by a 40-day facilities shutdown for thorough routine inspection and maintenance that generally occurs every two years. During the three months ended June 30, 2013, we sold 85,999 metric tons of petrochemical products at an average price of $1,096 per metric ton, compared to 169,107 metric tons of petrochemical products at an average price of $1,091 per metric ton in the three months ended June 30, 2012. This represents a decrease of approximately 49% in overall products sold.
Sales for the six months ended June 30, 2013 were approximately $304 million, compared to $368 million for the six months ended June 30, 2012, a decrease of $64 million, or 17%. There was no significant change in the average selling prices for the six months ended June 30, 2013 ($1,123 per ton) and the average selling prices for the six months ended June 30, 2012 ($1,125 per ton).
Overall cost of sales was approximately $92 million for the three months ended June 30, 2013, or 97% of sales, as compared to approximately $178 million, or 96% of sales for the three months ended June 30, 2012. Cost of sales is primarily composed of the costs of direct raw materials (mainly heavy oil, benzene, butadiene and carbinol), labor, depreciation and amortization of manufacturing equipment and facilities, and other overhead. The increase in the percentage of cost of sales was mainly due to the routine maintenance cost that occurred during the period and also the higher unit cost of $1,065 per ton for the three months ended June 30, 2013 as compared to unit cost of $1,053 per ton for the three months ended June 30, 2012.
Overall cost of sales was approximately $292 million for the six months ended June 30, 2013, or 96% of sales, as compared to approximately $352 million, or 96% of sales for the six months ended June 30, 2012. In the six months ended June 30, 2013, average cost of finished product was $1,080 per metric ton, as compared to $ 1,076 per metric ton in the six months ended June 30, 2012, a slight increase of 0.4%.
Gross profit for the three months ended June 30, 2013 was approximately $2.6 million as compared to $6.4 million for the comparable period in 2012, a decrease of approximately $3.8 million, or 59.1%. The decrease was mainly due to the increased maintenance fees and fixed costs during the period as a result of production suspension.
Gross profit for the six months ended June 30, 2013 was approximately $11 million as compared to $16 million for the comparable period in 2012. Gross margin decreased from 4.4% for the six months ended June 30, 2012 to 3.6% for the six months ended June 30, 2013. The main reason for the decrease in the gross margin is mainly due to the lost production, increased unit cost and lower selling prices.
Operating expenses, including selling expenses, and general and administrative expenses, were approximately $2.9 million, or 3% of sales for the three months ended June 30, 2013, as compared to $3.0 million, or 1.65% of sales for the comparable period in 2012, a slight decrease of approximately $0.19 million or 6.19%. The decrease was mainly due to overall decreases in all expenses as a result of lower sales during the shutdown period.
Operating expenses, including selling expenses and general and administrative expenses, were approximately $6 million, or 2% of sales for the six months ended June 30, 2013, as compared to $5.9 million, or 1.6% of sales for the comparable period in 2012, an increase of approximately $0.1 million. The increase in the expenses was due to general increases in welfare expenses and taxes.
Net loss was approximately $0.5 million for the three months ended June 30, 2013, as compared to net income of approximately $1.1 million in the same period in 2012, a decrease of $1.6 million, or 147%. This decrease was mainly due to the lower sales for the three months ended June 30, 2013, compared to the same period of 2012 and increased borrowings.
Net income was approximately $2.4 million for the six months ended June 30, 2013, as compared to approximately $2.9 million in the same period in 2012, a decrease of $ 0.5 million, or 16.7%. This decrease was mainly due to the decrease of production and sales in 2013, compared to the same period of 2012.
Other updates
Consumption Tax Refund
The PRC government enacted a regulation that provides consumption tax exemptions for domestically purchased heavy oil which is used for the manufacture of ethylene and aromatics products. In addition, the consumption tax paid for imported heavy oil is to be refunded if the heavy oil was used for ethylene and aromatics products manufacture. Given that all heavy oils purchased by the Company are, or are to be, used for the production of ethylene and aromatics products, the Company recognizes a consumption tax refund receivable when the consumption tax has been paid and the related heavy oils have been used for production. As of June 30, 2013 and December 31, 2012, the Company recorded an estimated consumption tax refund amounting to approximately $93.7 million and $51.3 million, respectively.
A refund of approximately $67.7 million was received by the Company in July 2013, and a refund of $34 million is expected to be approved and received in the second half of 2013.
About Keyuan Petrochemicals, Inc.
Keyuan Petrochemicals, Inc., established in 2007, through its PRC operating subsidiaries, Ningbo Keyuan Plastics Co., Ltd, Ningbo Keyuan Petrochemicals Co., Ltd, Keyuan Synthetic Rubbers Co., Ltd and Guangxi Keyuan Co., Ltd, is engaged in the manufacture and sale of various petrochemical products in the PRC. Having commenced production in October 2010, Keyuan's operations include an annual petrochemical manufacturing design capacity of 720,000 MT for a variety of petrochemical products, with facilities for the storage and loading of raw materials and finished goods, and a technology that supports the manufacturing process with low raw material costs and high utilization and yields. Keyuan also completed the construction of a Styrene-Butadience-Styrene (the "SBS") production facility with an annual production capacity of 70,000 MT in September 2011. One SBS production line began commercial production in December 2011 and the second line began commercial production in August 2012. In order to meet increasing market demand, Keyuan adjusted its original expansion project and is currently working to refine its manufacturing capacity to include an ABS production facility, an oil catalytic cracking processing facility, an increased annual design capacity of its ethylene-styrene facility from 80,000 MT to 200,000 MT, a transformer oil facility and an SSBR (Solution Polymerized Styrene Butadiene Rubber) production facility.
Cautionary Statement Regarding Forward-Looking Information
This press release may contain certain "forward-looking statements" relating to the business of Keyuan Petrochemicals, Inc., and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding the impact of the proceeds from the private placement on the Company's short term business and operations, the general ability of the Company to achieve its commercial objectives, including the ability of the Company to sustain growth; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. 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. Investors 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 the Securities and Exchange Commission and available on its website (http://www.sec.gov ). All forward-looking statements attributable to the Company or persons acting on its behalf months 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.
For more information, please contact:
US Contact Information:
Jim Jiang
Keyuan Petrochemicals, Inc
Phone: +001-1-646-705-1386
Email: jzm0580@gmail.com
Web: www.keyuanpetrochemicals.com
Company Contact Information:
Bill Bai
Keyuan Petrochemicals, Inc.
Phone: +0086-138-0588-7777
Email: baih@krcc.cn
Web: www.keyuanpetrochemicals.com
KEYUAN PETROCHEMICALS, INC. AND SUBSIDIAIRES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
June 30, December 31,
2013 2012
---- ----
ASSETS (Unaudited)
Current
assets:
Cash
Pledged bank
deposits $2,309 $23,378
Bills
receivable 296,407 201,252
Accounts
receivable 12,254 3,968
Inventories 10,475 14,248
Prepayments to
suppliers 56,053 48,634
Consumption
tax refund
receivable 31,402 23,476
Amounts due
from related
parties 93,674 51,334
Other current
assets 295 40
Deferred
income tax
assets 54,395 56,320
Total current
assets 1,762 2,801
----- -----
559,026 425,451
------- -------
Property,
plant and
equipment,
net
Intangible
assets, net 253,033 227,603
Land use
rights 855 880
VAT
recoverable 10,694 10,708
2,568 2,232
----- -----
Total assets
$826,176 $666,874
======== ========
LIABILITIES
AND
STOCKHOLDERS'
EQUITY
Current
Liabilities:
Short-term
bank
borrowings
Bills payable $475,614 $295,146
Accounts
payable 148,327 102,650
Advances from
customers 81,846 130,387
Accrued
expenses and
other
payables 6,117 24,405
Income tax
payable 24,895 26,833
Dividends
payable - 2,344
Amounts due to
related
parties 2,382 2,382
Total
liabilities,
all current - 479
--- ---
739,181 584,626
------- -------
Series B
convertible
preferred
stock:
Par
value:$0.001;
Authorized:
8000,000
shares issued
and
outstanding:
5,333,340
shares,
liquidation
preference
$20,250 16,452 16,452
------ ------
Commitments
and
contingencies - -
Stockholders'
equity:
Common stock:
Par value:
$0.001; 31, 2012
Authorized:
100,000,000
shares Issued
and
outstanding:
57,464,160
shares as at
June 30, 2013
and December 58 58
Additional
paid-in
capital 51,350 50,653
Statutory
reserve 4,074 4,071
Accumulated
other
comprehensive
income 9,122 7,491
Retained
earnings 5,939 3,523
----- -----
Total
stockholders'
equity 70,543 65,796
------ ------
Total
liabilities
and
stockholders'
equity $826,176 $666,874
======== ========
KEYUAN PETROCHEMICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(Amounts in thousands, except share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2013 2012 2013 2012
---- ---- ---- ----
Sales $94,257 $184,426 $303,811 $367,750
Cost of sales 91,628 178,006 292,360 351,857
------ ------- ------- -------
Gross profit 2,629 6,420 11,451 15,893
----- ----- ------ ------
Selling expenses 236 388 403 641
General and administration expenses 2,621 2,657 5,591 5,267
----- ----- ----- -----
Total operating expenses 2,857 3,045 5,994 5,908
----- ----- ----- -----
(Loss) income from operations (228) 3,375 5,457 9,985
---- ----- ----- -----
Other income (expense):
Interest income 3,151 1,883 3,902 2,822
Interest expense (7,045) (2,930) (10,441) (7,309)
Foreign exchange gain (loss), net 4,652 (543) 6,205 (364)
Other (expense) income, net (715) 147 (1,095) (217)
---- --- ------ ----
Total other income (expense), net 43 (1,443) (1,429) (5,068)
--- ------ ------ ------
(Loss) income before income taxes (185) 1,932 4,028 4,917
Income tax expense 312 870 1,607 2,010
--- --- ----- -----
Net (loss) income attributable to Keyuan Petrochemicals Inc. stockholders (497) 1,062 2,421 2,907
Dividends to Series B convertible preferred stockholders - - - -
--- --- --- ---
Net (loss) income attributable to Keyuan Petrochemicals Inc. common
stockholders $(497) $1,062 $2,421 $2,907
===== ====== ====== ======
Net (loss) income attributable to Keyuan Petrochemicals Inc. stockholders $(497) $1,062 $2,421 $2,907
Other comprehensive income:
Foreign currency translation adjustment 1,101 131 1,632 708
----- --- ----- ---
Comprehensive income $604 $1,193 $4,053 $3,615
==== ====== ====== ======
Earnings (loss) per share:
Attributable to common stock:
-Basic $(0.01) $0.02 $0.04 $0.05
====== ===== ===== =====
-Diluted $(0.01) $0.02 $0.04 $0.05
====== ===== ===== =====
Weighted average number of shares of common stock used in calculation:
-Basic 57,646,160 57,646,160 57,646,160 57,646,160
========== ========== ========== ==========
-Diluted 57,646,160 62,979,500 62,979,500 62,979,500
========== ========== ========== ==========
KEYUAN PETROCHEMICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in thousands, except share data)
Six months ended
June 30,
--------
2013 2012
---- ----
Cash flows from operating
activities:
Net income $2,421 $2,907
Adjustments to reconcile net
income to net cash provided
by (used in) operating
activities:
Depreciation 6,047 5,452
Amortization 48 54
Land use rights amortization 234 226
Deferred income tax (benefit)
expense 1,086 -
Share-based compensation
expense 764 819
Changes in operating assets
and liabilities:
Bills receivable (8,116) (1,727)
Accounts receivable 3,988 2,244
Inventories (6,339) (33,864)
Prepayments to suppliers (7,645) (25,882)
Consumption tax refund
receivable (40,834) (50,875)
Other current assets 3,359 (16,566)
Accounts payable (19,970) (18,462)
Advances (to) from customers (18,593) 29,342
Income taxes payable (2,595) 880
Accrued expenses and other
payables (646) (1,483)
---- ------
Net cash used in operating
activities (86,791) (106,935)
------- --------
Cash flows from investing
activities:
Purchase of property, plant
and equipment (28,318) (21,296)
------- -------
Net cash used in investing
activities (28,318) (21,296)
------- -------
Cash flow from financing
activities:
Pledged bank deposits used for
bank borrowings (90,005) (82,489)
Proceeds from short-term bank
borrowings 646,075 457,866
Repayment of short-term bank
borrowings (504,884) (291,149)
Proceeds from bank notes 130,724 111,379
Repayments of bank notes (87,644) (64,059)
------- -------
Net cash provided by financing
activities 94,266 131,548
------ -------
Effect of foreign currency
exchange rate changes on cash (226) (763)
---- ----
Net (decrease) increase in
cash (21,069) 2,554
Cash at beginning of period 23,378 7,325
------ -----
Cash at end of
period $2,309 $9,879
------ ------
Supplemental disclosure of
cash flow information:
Income tax paid $3,056 $1,029
Interest paid, net
of capitalized
interest $10,441 $589
Non cash investing and
financing activities:
Payable for purchase
of property, plant
and equipment (net
of VAT) $6,068 $4,434
SOURCE Keyuan Petrochemicals, Inc.
