KUNMING, China, April 14 /PRNewswire-Asia-FirstCall/ -- China Shenghuo Pharmaceutical Holdings, Inc. (“China Shenghuo” or the “Company”), today reported financial results for the fourth quarter and record revenue for the year ended December 31, 2009.
Mr. Gui Hua Lan, Chief Executive Officer of China Shenghuo, commented, “Sales for the year ended December 31, 2009 were approximately $36.0 million, an increase by 25.5% from $28.7 million for the year ended December 31, 2008. The increase in sales was primarily due to the Company’s implementation of a new sales policy that has stimulated the enthusiasm of sales representatives, resulting in the increased sales of products. Our primary products, Xuesaitong Soft Capsules and the innovative 12 Ways cosmetic products continued to produce meaningful growth in a difficult market environment.”
Fourth Quarter 2009 Results
For the quarter ended December 31, 2009, total sales were $10.5 million, up 43.8% from $7.3 million in the same quarter last year. This sales growth was mainly due to the Company’s implementation of a new sales policy that has stimulated the enthusiasm of sales representatives and resulted in the increased sales of products.
Gross profit for the quarter was $8.3 million, an increase of 23.9% from $6.7 million for the same period of 2008. Gross margin was 78.7% for the quarter, decreased from 91.4% for the same period in 2008 due to the increasing price of raw materials.
Selling expenses increased 44.9% year-over-year to $6.7 million from $4.6 million for the fourth quarter of 2008 mainly due to more marketing and sales efforts.
General and administrative expenses decreased 56.2% to $1.7 million from $3.9 million in the fourth quarter of 2009. The decrease was primarily attributable to reduction of bad debt loss and strengthened budget control over expense disbursements.
Income tax benefit was $0.6 million, compared to income tax expense of $0.4 million for the fourth quarter of 2008. The income tax benefits were mainly generated from accumulated losses carried forward, which the Company believed would be able to be realized by implementing a tax planning strategy.
Net income attributable to stockholders for the fourth quarter 2009 was $0.2 million, compared with a net loss of $2.4 million for the fourth quarter 2008. Basic and diluted earnings per share were $0.01 for the fourth quarter 2009, compared to a basic and diluted loss per share of $0.12 for the fourth quarter 2008.
Full Year 2009 Results
For the year ended December 31, 2009, sales increased 25.5% to $36.0 million, from $28.7 million for the year ended December 31, 2008. The increase in sales was primarily due to the Company’s implementation of a new sales policy that has stimulated the enthusiasm of sales representatives and resulted in the increased sales of products.
Gross profit increased 24.3% to $26.1 million for the year ended December 31, 2009 from $21 million for fiscal year 2008. Gross profit margin was 72.5% compared with 73.2% for the previous year. The decrease in gross profit margin was primarily due to the increasing price of raw material.
Selling expenses increased 98.0% year-over-year from $13.3 million to $26.3 million mainly due to more marketing and sales efforts.
General and administrative expenses decreased 36.3% from $10.9 million to $6.9 million, mainly due to reduction of bad debt loss and strengthened budget control over expense disbursements.
Research and development expense decreased 58.7% from $0.3 million to $0.1 million mainly due to more focus on a few innovative pharmaceuticals instead of on a number of generic drugs.
Total operating expenses for 2009 were $33.3 million compared with $24.5 million for 2008.
Income taxes benefits were $1.1 million for the year ended December 31, 2009, compared to income taxes expense of $ 0.4 million for the year ended December 31, 2008. The income tax benefits were mainly generated from temporary deductible difference in accrued expenses and from accumulated losses carried forward, which the Company believed would be able to be realized by implementing a tax planning strategy.
Net loss attributable to stockholders was $6.6 million, or $0.33 loss per fully basic and diluted share, for the year ended December 31, 2009, compared with a net loss of $4.6 million, or $0.24 loss per fully basic and diluted share, for the year ended December 31, 2008.
Balance sheet
As of December 31, 2009, the Company had $2.0 million in cash and cash equivalents, $6.9 million of working capital deficiency and a current ratio of 0.79:1. The Company had $5.5 million short-term loans and $3.9 million - current portion of long-term borrowings. At year end, shareholders’ equity was $0.8 million decreasing from $7.4 million at the end of 2008.
The Company generated $2.5 million in cash from operating activities for the year ended December 31, 2009, compared to cash of $1.9 million in 2008. The strong cash flow from operating income was mainly due to increase of deposits prepaid by sales representatives and increase of advance from customers. The Company used $3.1 million in investing activities and obtained $1 million provided by financing activities.
About China Shenghuo
Founded in 1995, China Shenghuo is a specialty pharmaceutical company that focuses on the research, development, manufacture and marketing of Sanchi-based medicinal and pharmaceutical, nutritional supplement and cosmetic products. Through its subsidiary, Kunming Shenghuo Pharmaceutical (Group) Co., Ltd., it owns thirty SFDA (State Food and Drug Administration) approved medicines, including the flagship product Xuesaitong Soft Capsules, which has already been listed in the Insurance Catalogue. At present, China Shenghuo incorporates a sales network of agencies and representatives throughout China, which markets Sanchi-based traditional Chinese medicine to hospitals and drug stores as prescription and OTC drugs primarily for the treatment of cardiovascular, cerebrovascular and peptic ulcer disease. The Company also exports medicinal products to Asian countries such as Indonesia, Singapore, Japan, Malaysia, and Thailand and to European countries such as the United Kingdom, Tajikistan, Russia and Kyrgyzstan. For more information, please visit http://www.shenghuo.com.cn .
Safe Harbor Statement
This press release may contain certain “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and the actual results and future events could differ materially from management’s current expectations. Such factors include, but are not limited to, risks of litigation and governmental or other regulatory proceedings arising out of or related to any of the matters described in recent press releases, including arising out of the restatement of the Company’s financial statements; the Company’s ability to refinance or repay loans received; the Company’s uncertain business condition; the Company’s continuing ability to satisfy any requirements which may be prescribed by the Exchange for continued listing on the Exchange; risks arising from potential weaknesses or deficiencies in the Company’s internal controls over financial reporting; the Company’s reliance on one supplier for Sanchi; the possible effect of adverse publicity on the Company’s business, including possible contract cancellation; the Company’s ability to develop and market new products; the Company’s ability to establish and maintain a strong brand; the Company’s continued ability to obtain and maintain all certificates, permits and licenses required to open and operate retail specialty counters to offer its cosmetic products and conduct business in China; protection of the Company’s intellectual property rights; market acceptance of the Company’s products; changes in the laws of the People’s Republic of China that affect the Company’s operations; cost to the Company of complying with current and future governmental regulations; the impact of any changes in governmental regulations on the Company’s operations; general economic conditions; and other factors detailed from time to time in the Company’s filings with the United States Securities and Exchange Commission and other regulatory authorities. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
CONTACT: China Shenghuo Pharmaceutical Holdings, Inc., Miss Shujuan Wang,
Director of Securities Affairs Department, wangshujuan@chinashenghuo.net
Web site: http://www.shenghuo.com.cn/
