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Gulf Resources (GURE) – Comments & Business Outlook
Second Quarter 2012 Highlights
- Revenue was $31.3 million, a year-over-year decrease of 39.0%
- Gross profit was $9.9 million, a year-over-year decrease of 62.4%
- Gross margin decreased to 31.6 % compared to 51.3% in the second quarter of 2011
- Income from operations was $7.6 million as compared to $13.4 million in the second quarter of 2011
- Operating margin was 24.3% compared to 26.1% for the second quarter of 2011
- Net income was $5.7 million or $0.16 per basic and diluted share, versus $10.0 million, or $0.29 per basic and diluted share a year ago, respectively
- Cash totaled $72.0 million as of June 30, 2012
“Although the Chinese central government has now adopted a more flexible credit and monetary policy to cope with the slowdown of economic growth and the accompanying structural change in the economy, we are inevitably impacted by the lower demand in private investing and moderate decrease in consumption by our customers in the business segments of our company. In comparison to the same period last year, our operating performance for the second quarter this year was significantly lower. While bromine average selling price decreased from $4,333 per tonne for the second quarter in 2011 to $3,486 per tonne for the same period this year, we expect bromine prices to remain relatively stable throughout the year given current economy condition. We expect this economic condition to continue throughout the rest of the year,” said CEO Mr. Xiaobin Liu.
Business Outlook
“In the near term, we are likely to encounter operating pressure due to a foreseeable increase in labor and lowered bromine price influenced by the nationwide housing price control by the central government. As soon as the economy pass the phase of structural change and the condition, turn favorable, we expect we will be able to benefit from the underground bromine reserve we previously obtained with our equipment and facilities being consistently upgraded. In addition, as the market prices of potential acquisition targets are subjected to undervaluation due to the current economic environment, we will attempt to retain cash in order to take advantage of the market by acquiring quality assets that can enable our company to sustain long term growth in the future.” Said CEO, Xiaobin Liu.
2012-11-09 18:21:13
Source: http://geoinvesting.com/companies/gure_gulf_resources/research/comments_business_outlook/0040555
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