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Gulf Resources Announces Preliminary Results for the Third Quarter of 2008
Published Nov 10th, 2008
NEW YORK & SHANDONG PROVINCE, China--Gulf Resources, Inc ("Gulf Resources" or the "Company"), a leading manufacturer of bromine, crude salt and specialty chemical products in China, today announced preliminary financial results for the third quarter ended September 30, 2008.
Gulf Resources expects net revenue in the third quarter of 2008 of $17.6 million, an increase of 7.3% from $16.4 million in the third quarter of 2007. The restrictions on chemical manufacturers and transportation in the Beijing and Qingdao areas before and during the Beijing 2008 Olympic Games ("Olympic Games") impacted orders of both bromine and chemical products during the third quarter of 2008. The Company, however, still experienced an increase in net revenue, which was primarily attributable to increased sales in the bromine and crude salt segment of the business as a result of increased bromine production capacity.
The Company expects gross profit margin for the third quarter of 2008 to be approximately 35.1% compared to 41.8% in the third quarter of 2007. The decrease in gross profit margin is due to increases in raw material and energy prices during the third quarter of 2008.
Net income is expected to be $3.7 million in the third quarter of 2008, demonstrating a 5.1% decrease from $3.9 million in the third quarter of 2007.
"Although the government-imposed restrictions on chemical production and distribution in Beijing and Qingdao due to the Olympic Games slowed down our activity during the third quarter, so far our orders for the fourth quarter have recovered to levels obtained in the first quarter of 2008," said Ming Yang, Chief Executive Officer of Gulf Resources. "We believe that long term demand for bromine will remain strong in China even in a cooling economy, as the outlook for many of the downstream applications utilizing bromine, such as oil and gas exploration, continues to be promising. Also, a reduction in the price of raw materials is likely to improve our gross margin by the end of 2008."
The preliminary expectations are subject to revision until the Company reports final third fiscal quarter results in its Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission. Growth rates may change due to rounding.
The preliminary expectations are subject to revision until the Company reports final third fiscal quarter results in its Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission. Growth rates may change due to rounding.
About Gulf Resources, Inc.
Gulf Resources, Inc. operates through two wholly-owned subsidiaries, Shouguang City Haoyuan Chemical Company Limited ("SCHC") and Shouguang Yuxin Chemical Industry Co., Limited ("SYCI"). The Company believes that it is one of the largest producers of bromine in China. Elemental Bromine is used to manufacture a wide variety of compounds utilized in industry and agriculture. Through SYCI, the Company manufactures chemical products utilized in a variety of applications, including oil & gas field explorations and as papermaking chemical agents.
Forward-Looking Statements
Certain statements in this news release contain forward-looking information about Gulf Resources and its subsidiaries business and products within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. The actual results may differ materially depending on a number of risk factors including, but not limited to, the general economic and business conditions in the PRC, future product development and production capabilities, shipments to end customers, market acceptance of new and existing products, additional competition from existing and new competitors for bromine and other oilfield and power production chemicals, changes in technology, the ability to make future bromine asset purchases, and various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risks factors detailed in the Company's reports filed with the Securities and Exchange Commission. Gulf Resources undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.
Certain statements in this news release contain forward-looking information about Gulf Resources and its subsidiaries business and products within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. The actual results may differ materially depending on a number of risk factors including, but not limited to, the general economic and business conditions in the PRC, future product development and production capabilities, shipments to end customers, market acceptance of new and existing products, additional competition from existing and new competitors for bromine and other oilfield and power production chemicals, changes in technology, the ability to make future bromine asset purchases, and various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risks factors detailed in the Company's reports filed with the Securities and Exchange Commission. Gulf Resources undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.