Metalnewsnet 1 Apr:

China Energy Corporation a leading Inner Mongolia producer and processor of raw coal for domestic heating, electrical generation and coking purposes for steel production in the People Republic of China announced financial results for the Q4 and fiscal year 2009.

Fourth quarter revenues totaled USD 21.9 million an increase of approximately 300% over revenues of USD 5.5 million in the same period in fiscal year 2008. The increase was due primarily to a USD 10 million expansion and improvement program at the LaiYeGou coal mine in Inner Mongolia, PRC. The program was completed in August 2009 and included the installation of more efficient longwall mining equipment which increases the amount of recoverable coal from 40% previously to as much as 80% and significantly increases the utilization efficiency of the Company's coal reserves.

China Energy produced approximately 295,000 tonnes of coal, compared to 136,000 tonnes in the Q3 of fiscal year 2009. Average pricing was USD 39 per ton during the Q4 of fiscal 2009. Today China Energy has the capacity to produce up to 800,000 tonnes annually which is more than 2008 and 2009 combined. Net income for the Q4 of fiscal year 2009 was USD 6.6 million, or USD 0.15 per diluted share compared to USD 4.2 million, or USD 0.09 per diluted share in the Q4 of fiscal year 2008.

Fiscal Year 2009 Financial Results

For the year ended November 30, 2009, the Company reported revenue of USD 41.7 million, an increase of 110% over revenue of USD 19.9 million generated in 2008. For the fiscal year, sales from the Company's coal group increased 148% to USD 32 million, or 77% of total sales, compared to USD 12.9 million, or 65% of total sales in fiscal year 2008. As a component of this, 36% of total company sales came from coal trading, and 41% came from coal production during fiscal year 2009. Average sales price of coal during fiscal year 2009 was USD 37 per ton, compared to USD 33 per tonne in fiscal year 2008.

Sales of the heat power group totaled USD 9.7 million or USD 23% of total sales, in fiscal year 2009 compared to USD 7.0 million or 35% of total sales in fiscal year 2008. The higher level of sales from the heat power group was attributed to an increase of over 50% in the coverage area of the Company heat power operations and a 31% increase in volume of electricity sold by its electric power operations.

Mr WenXiang Ding CEO & president of China Energy Corporation said "China Energy is well positioned to benefit from the growing demand and increasing price for coal used in heating, power generation and manufacturing, as a result of the rapid growth in the Chinese economy. With our expanded production capacity at our LaiYeGou coal mine, coupled with our stable and growing thermoelectric heating and coal brokerage businesses, we expect to generate significant top and bottom line growth for 2010. We will consider acquisition opportunities to expand our production and distribution capabilities, and are well positioned to leverage our seasoned management team if industry consolidation commences in Inner Mongolia."

Cost of goods sold for fiscal year 2009 was approximately USD 29.4 million, compared to approximately USD 14.0 million for fiscal year 2008. Gross profit was USD 12.3 million and gross margins were 29.5% in 2009, compared to USD 5.9 million in gross profit and gross margins of 29.6% during 2008.

Operating expenses for fiscal year 2009 were approximately USD 5.5 million, or 13.2% of revenue, compared to USD 2.7 million, or 13.6% of revenue in 2008. Selling and marketing expenses in fiscal year 2009 were USD 2.2 million compared to USD 0.4 million in 2008 and general and administration expenses totaled USD 3.3 million and USD 2.3 million in the respective periods. The increase in selling and marketing expenses in fiscal year 2009 was attributable in large part to the inclusion of USD 1.4 million in transportation and storage expenses incurred in the Company proprietary coal trading business. These expenses were first incurred in fiscal year 2009 because that was the first full year of the coal trading business.

Net income for fiscal year 2009 totaled approximately USD 5.1 million, or USD 0.11 per diluted, share, compared to approximately USD 4.0 million, or USD 0.09 per diluted share, in fiscal year 2008. Net income margins were 12.2% and 20.1% for fiscal years 2009 and 2008, respectively. Contributing to the decline in net margin was a reduction in government subsidies from USD 3.0 million in 2008 to USD 1.6 million in 2009. The amount recorded for the 2008 subsidy was artificially high due to the inclusion of a portion of the Company 2007 subsidy in fiscal year 2008.

(From steelguru)