TSX:ZPP
VANCOUVER, Aug. 13 /CNW/ - Zongshen PEM Power Systems Inc. ("ZPP" or the "Company") (TSX:ZPP), today announced its financial results for the three-month and six-month periods ended June 30, 2009. All currency amounts referred to in this news release are in Canadian dollars unless stated otherwise.
For the three-month period ended June 30, 2009, the Company reported revenues of $5.3 million versus $7.1 million in the corresponding quarter a year ago. Volume sales during the second quarter of 2009 totalled 14,153 units, compared with 22,715 units in the second quarter of 2008. Second quarter results continued to be negatively impacted by the lack of unit sales due to lack of consumer spending in China, and lower export volumes. As a result of lower volume sales and ongoing fixed costs leading to lower capacity utilization, gross margin during the quarter decreased to 7 percent versus 16 percent during the corresponding period in 2008. During the quarter, the Company reported a net loss amounting to $943,890 or $0.01 per share, versus a net income of $484,553 or $0.01 per share for the second quarter of 2008.
For the six-month period ended June 30, 2009 the Company reported revenues of $13.1 million versus $13.6 million in the corresponding period a year ago. Volume sales during the first six-month period in 2009 totalled 35,273 units, compared with 46,128 units during the same period in 2008. During the six-month period, the Company reported a net loss of $801,257, or $0.01 per share, versus a net income of $360,175, or $0.01 per share.
At June 30, 2009, the Company was debt free with cash and cash equivalents amounting to $39.5 million, compared to $41.6 million at March 31, 2009 and $33.3 million at December 31, 2008. During the quarter, the Company deployed $1.9 million towards the construction of its Chongqing production facility. The Company's strong balance sheet enables ZPP to weather the current economic downturn while having the ability to explore and complete select partnerships and acquisitions.
"We continued to experience the negative impacts of the market downturn in our business during the quarter, however we initialized a restructuring initiative at the operational level which is expected to drive efficiencies and growth once consumer demand for premium bikes and scooters return to historical levels," noted Zongshen Zuo, Chairman and CEO of Zongshen PEM Power Systems Inc. "We continue to be optimistic that the second half of 2009 will demonstrate much stronger demand and performance as our main markets and distributors demand more product. We are also hopeful to secure certain strategic partnerships which will allow ZPP to enjoy improved capacity utilization and ramp up revenues through market share gain."
ZPP continues to expect 2009 to be a challenging year for the organic growth of its bike and scooter products. Based on the current business climate, the Company expects lower revenues and sales volume in 2009 compared to the results achieved in 2008. However, the Company is well positioned to advance its growth strategy with a solid foundation in e-bikes and small gas bikes, a strong balance sheet, a large market for its products and a major shareholder and partner with assets and resources that can be leveraged to gain competitive advantages. The Company continues to evaluate and review strategic growth opportunities through partnerships and acquisitions, which would complement its existing business.
The Company will host a conference call on Friday, August 14, 2009 at 11:00 a.m., Eastern Standard Time (EST) to further discuss the second quarter 2009 financial and operational results.
Dial in information is as follows:
Dial in number: 1-888-609-5696 (North America) or 1-913-312-1495
(International)
Taped Replay: 1-888-203-1112 (North America) or 1-719-457-0820
(International)
Taped Replay Pass Code: 2887475 (Available until August 28, 11:59 p.m.
EST)
Live Webcast Link:
www.zongshenpem.comAbout Zongshen PEM Power Systems Inc.
Zongshen PEM Power Systems Inc. is a public company trading under the symbol ZPP on the Toronto Stock Exchange. The Company is engaged in the commercialization of alternative power systems including batteries, fuel cells and solar power, for a variety of consumer and industrial applications. The Company manufactures low-cost, high quality, environmentally friendly small gas motorbikes, electric motorcycles, electric bicycles and other e-vehicles in China for the Chinese domestic and international markets. Zongshen PEM Power System's largest shareholder is Zongshen Industrial Group, one of China's largest manufacturers and distributors of motorcycles, engines, and power equipment.
Forward Looking Information
This release contains forward-looking statements, which may be identified by statements containing the words "will", "anticipate", "expect", "intend" and other similar expressions. These statements are based on certain factors and assumptions including foreign exchange rates, expected growth and sales, results of operations, performance, and business prospects and opportunities and effective income tax rates. While the company considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Several factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to: our relationship with Zongshen Industrial Group; fluctuations in market demand for small gas motorbikes and e-bikes; changes in competitive pressures, including pricing pressures; timing and amount of capital expenditures; changes in financial and capital markets and corresponding effects on the company's investments; changes in currency and exchange rates; and the effects of government policy and regulations;. Additional risks and uncertainties can be found in our MD&A for the interim period ended June 30, 2009 and in our other filings with the Canadian securities commissions. Forward-looking statements are given only as at the date of this release and the company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
For further information: Ali Mahdavi, Zongshen PEM Power Systems Inc., Vice President, Corporate Finance & Investor Relations, (416) 962-3300, 1-877-775-8734, amahdavi@zongshenpem.com
