INNER MONGOLIA, CHINA -- (Marketwire) -- 08/15/12 -- China Carbon Graphite Group, Inc. (OTCQB: CHGI) (PINKSHEETS: CHGI) ("China Carbon" or the "Company"), the largest wholesale supplier of fine-grain and high-purity graphite in China and one of the nation's top manufacturers of carbon and graphite products, today announced its financial results for the second quarter ended June 30, 2012.
Second Quarter (Q2) 2012 Highlights:
•Gross profit grew 7.6%, from $2.69 million in Q2 2011 to $2.89 million in Q2 2012 •Gross profit rate grew 10.0%, from 22.1% in Q2 2011 to 24.4% in Q2, 2012 •Further advanced its product mix optimization process, with higher margin products made from fine grain and high purity graphite still key development priorities •Our working capital increased from $1.06 million as of December 31, 2011 to $7.83 million as of June 30, 2012
Summarized Q2 2012 Results:
Q2 2012 Q2 2011 CHANGERevenue $11.88 million $12.15 million -2.2%Gross Profit $2.89 million $2.69 million +7.6%Net Income $0.87 million $0.88 million -1.3%EPS(Diluted) * $0.04 $0.04 -* Earnings per diluted share of $0.04 on 24.25 million shares for Q2 2012. For Q2 2011, China Carbon reported fully diluted earnings per share of $0.04 on 23.19 million shares.
"We further ramped-up our higher margin business this past quarter," said Donghai Yu, Chief Executive Officer of China Carbon. "Notably, we were able to sustain growth in the percentage of sales of our higher margin products made from fine grain and high purity graphite products. This strategy together with our effort in price and profit control allowed us to increase our gross profit rate during the three months ended June 30, 2012 compared to the same period last year."
Second Quarter 2012 Financial Results
China Carbon had sales of $11.88 million in Q2 2012 compared to sales of $12.14 million in Q2 2011, a decrease of $0.27 million or 2.2%. This decrease was mainly attributable to a decrease of $424,116 in the sales of the Company's low-end graphite electrodes products during Q2 2012, which is a reflection of the Company's decision to continue focusing on the manufacturing and selling of its higher margin products.
China Carbon's Q2 2012 sales included $1.50 million in graphite electrodes, $5.31 million in fine grain graphite, and $5.07 million in high purity graphite. In Q2 2011, the Company's sales included $1.92 million in graphite electrodes, $5.28 million in fine grain graphite, and $4.94 million in high purity graphite.
When further comparing Q2 2011 with Q2 2012, the average unit-selling price of China Carbon's products increased 6%, which was offset by the 10% decrease in tonnage sold for the period. During this period, the average unit-selling price of its high purity graphite products, in particular, increased 8%, which is a reflection of an increase in the cost for raw materials for such products. This increase in the average unit-selling price of high purity graphite products was offset by the 7% decrease in tonnage sold for the period as a result of less orders from certain customers due to price increases and a slight dip in the Chinese construction industry. The main reason for the Company's lower sales was due to the average unit-selling price of graphite electrodes products decreased 14%, combined with a 12% decrease in tonnage sold, from Q2 2011 to Q2 2012. The decrease in the average unit selling price and tonnage sold of graphite electrodes products is mainly due to decreased demand on the lower end products.