Recycling Corp. reports increased revenues
Guanwei Recycling Corp., China’s leading clean
tech manufacturer of recycled low density polyethylene (LDPE),
reported that a second quarter plant expansion and refurbishment,
and lower gross margins, produced lower than planned revenue
and profit comparisons in its second quarter ended June 30, 2010.
Revenues in the 2010 second quarter grew 16.59 percent to $9,116,737,
from $7,819,356 in the same period last year. As gross margins
declined from 48.52 percent in last year’s second quarter to
31.01 percent in the 2010 second quarter, net income declined
32.17 percent to $1,670,985, compared with $2,463,329 in the
same period last year. EPS in the 2010 second quarter was $0.09.
In the second quarter ended June 30, 2010,
the Company sold 8,501 tons of recycled LDPE – an increase of
10.55 percent from 7,690 tons sold in the corresponding period
of 2009. This gain was much lower than anticipated due to the
decision to expand and upgrade the company’s washing and smashing
plant, a project that was completed in July. Nevertheless, the
volume gain in the quarter was accompanied by price increases.
The average selling price of recycled LDPE increased 4.61 percent
from approximately $996 per ton in the three months ended June
30, 2009 to approximately $1,042 per ton in the same period in
2010. In fact, average selling prices of recycled LDPE have been
steadily increasing and in July and August have been above $1,100
per ton. Coupled with strong demand for the company’s products
and anticipated sales gains, this is expected to positively impact
revenues going forward.
During the 2010 second quarter, the company’s
cost of revenues – consisting of imported plastic waste, transportation,
custom tax and labor – increased substantially. The increase
was primarily due to the fact that in early 2009, the company
took advantage of its strong financial position to stockpile
raw materials at abnormally lower prices immediately following
the global financial crisis and, accordingly, material costs
in the three months ended June 30, 2009 were comparatively lower.
Average manufacturing costs of recycled LDPE and sorted non-LDPE
materials increased from approximately $467 per ton in the 2009
second quarter to an average cost of $647 per ton for the same
period of 2010.