China’s Guanwei Recycling reports third quarter results

Guanwei Recycling Corp., a manufacturer of recycled low density polyethylene (LDPE) located in China, reported continuing strong demand for plastics in China propelled a 28 percent year over year increase in third quarter sales of its self-manufactured, recycled LDPE core product. Higher costs in the quarter reduced margins, however, resulting in an approximately five percent decline in year over year net income. Through the first 9 months of the year, net income was up 29 percent on a 39 percent gain in revenues which included a 48 percent increase in sales of self-manufactured recycled LDPE.

Financial highlights

•Net revenues in the 2011 third quarter grew to $16,679,012, up 11.31 percent from $14,983,816 in the year earlier period. Sales in this year’s third quarter of self-manufactured recycled LDPE advanced to $16,348,291, up 28.42 percent compared with $12,730,548 a year earlier, while sales in the quarter of non-LDPE scrap materials grew 26.1 percent. Last year’s third quarter included $1,991,009 in sales of purchased recycled LDPE.

•2011 third quarter net income was $3,375,758, or $0.17 per share compared with $3,547,997 or $0.18 per share in the 2010 third quarter, on 20 million weighted average diluted shares in both periods. In the 2011 third quarter, the Company’s cost of revenue increased 17.34 percent year over year to $11,722,192, mainly due to higher raw material costs, and operating expenses increased 75.75 percent to $526,604, mainly due to increased remuneration and staff related costs and higher depreciation expenses.

•Net revenues rose 38.65 percent in the first 9 months of 2011 to $46,579,286 compared with $33,594,779 in the year earlier period reflecting 47.76 percent year over year growth in core self-manufactured recycled LDPE sales.

•Net income in the first 9 months of 2011 increased 28.57 percent to $9,544,400, or $0.48 per share, from $7,423,586, or $0.37 per share a year earlier, on 20 million weighted average diluted shares in both periods.

•At the end of the 2011 third quarter, cash and cash equivalents were $15,080,995 compared with $14,940,236 on December 31, 2010. Shareholders’ equity increased to $29,761,939 from $19,146,812 at year end 2010 as short term borrowings were reduced to zero from $3,716,377, and retained earnings grew nearly $10 million to $25,380,028.