Baoding City, China, 27 March 2009 -- /PRNewswire/ -- Orient Paper, Inc. (OTC Bulletin Board: OPAI - News), a growing paper manufacturing and distribution company in China, today announced financial results for the fourth quarter and fiscal year ended 31 December 2008.
Net revenue for 2008 reached USD 65.2 million, up 64.2% compared to the fiscal year 2007; gross profit totaled USD 12.6 million, up 90.1% compared to the fiscal year 2007; net income was USD 8.8 million, up 116% compared to the fiscal year 2007; and earnings per share doubled to USD 0.20 per diluted share for the fiscal year 2008
"In spite of difficult global economic and market conditions, we are pleased to announce significant growth in both net revenue and net income for fiscal year 2008. We are excited to have achieved our 2008 financial projections, which we had previously made," said Zhenyong Liu, chairman and chief executive officer of Orient Paper. "We attribute this strong performance to a number of factors, including a successful market strategy, the continuation of a stable and strong seller's market in the domestic paper industry, and higher production capacity associated with strengthened internal control and advanced production technology. In addition, our new product, high-strength corrugated paper, which began production in the third quarter of fiscal year 2008, contributed to the increase in our sales and profits," Liu said.
"Our main target market for our products has been in China's northern region. This has been our focus not only because the region provides growing demand for our products in the urban centers of Beijing and Tianjin, but because we also enjoy a price advantage in the region over competitors from other locales in China. We are approximately 75 miles (120 kilometers) from Beijing, the cultural center of China and our largest target market. Tianjin, another large urban center, is also approximately 75 miles from our facilities." Liu said, "We continue to see the benefits of our regional advantage, and believe that Orient Paper, Inc. is well-positioned to capture additional market share in 2009. To further enhance our position in the increasingly competitive paper industry, we will continue pursuing initiatives to enhance our product quality, brand recognition, and our sales and distribution channels."
Net revenue for fiscal year 2008 reached USD 65.2 million compared to USD 39.7 million for the fiscal year 2007, an increase of 64.2%. The increase was attributable to higher production capacity as a result of strengthened internal control and advancements in production technology, the continuation of a strong domestic market demand for Orient Paper's products, and the success of the company's targeted marketing of mid- to high-end paper customers in the northern China region. Further, the Chinese currency (renminbi yuan) has been appreciating against the U.S. dollar, leading to an increase in net revenue as reported in U.S. dollars.
Cost of sales for fiscal year 2008 was USD 52.6 million compared to USD 33.1 million for the same period in 2007, an increase of 59.1%. This increase is due primarily to the increase of net revenue, with the increase in cost of net revenue was roughly in line with the increase in net revenue.
Selling, general, and administrative expenses for fiscal year 2008 totaled USD 0.33 million compared to USD 0.14 million for the same period in 2007, an increase of 129.1%. This increase was due primarily to increased business travel and research expenses required to expand our production capacity and market position and a general salary increment made to employees.
Income from operations for fiscal year 2008 was USD 12.2 million compared to USD 6.5 million for the same period in 2007, an increase of 89.2%. The increase was primarily a result of higher net revenue generated and the relatively lower cost of net revenue and the increase on production capacity and sales growth.
Gross profit for fiscal year 2008 totaled USD 12.6 million compared to USD 6.6 million for fiscal year 2007, an increase of 90.1%. The increase in gross profit was mainly due to the company's efforts to implement stringent cost controls and price reductions in raw material costs. The increase in net revenue was greater than the increase in related costs of net revenue, resulting in an overall increase in gross profit. Net income was USD 8.8 million, or 13.5% of revenue for fiscal year 2008, compared to USD 4.1 million, or 10.2% of revenue for fiscal year 2007, an increase of 116%.
Despite the recent global economic slowdown, Orient Paper continues to experience strong demand for its products especially for cultural paper. The company expects total sales for 2009 to increase approximately 30% compared to 2008. These projections do not take into account any impact related to future financings or acquisitions. Orient Paper believes it can continue to grow and improve the company's operating results. The company believes that accelerated growth could be achieved by strengthening its operational foundation through efforts focused on issues such as internal cost control, improved logistics coordination, advanced technology import, new product development, and an increase in the overall managerial efficiency of the company. Orient Paper will continue to monitor customer demand carefully and take decisive action to preserve and strengthen its core-competence to achieve its objectives for long-term growth in earnings and stockholder value.
Orient Paper engages mainly in the production and distribution of products such as printing paper, uncoated and coated paper, corrugated paper, plastic paper, graphic design paper, and other paper and packaging-related products. For more information, visit http://www.orientalpapercorporation.com