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ZhongDe Waste Technology AG reports continuous growth in Q2 2008
- Q2 revenues increased by 16% yoy to € 8.9 million
- Net profit climbed to € 5.2 million, an advance of 11% yoy
- Earnings per share increased by 11% yoy to € 0.40 per share
- Continued strategic focus on municipal solid waste incinerators of larger scales
ZhongDe Waste Technology AG ('the Company') today announced its Q2 2008 results which continue to reflect the Company's growth profile.
Company revenues in the second quarter of 2008 grew by € 1.2 million to € 8.9 million representing an increase of 16% versus the same period in 2007. Growth was driven primarily by a rise in municipal incinerator sales. A total of three municipal solid waste incinerators were sold in Q2 2008. Revenues in municipal waste incinerator sales increased from € 5.8 million in Q2 2007 to € 8.9 million in Q2 2008. This constitutes a rise of 53%, despite selling the same number of units as in Q2 2007 due to higher average unit selling prices.
The upward trend in the municipal solid waste incinerator segment continues, leading to a rise in operating results in the second quarter of 2008. As a result gross profits increased from € 5.3 million in Q2 2007 to € 6.1 million in Q2 2008. The gross profit margin remained stable at 69%, outperforming expectations as the Company previously anticipated slight margins convergence due to the strategic focus on larger incinerators. The net profit increased from € 4.7 million in Q2 2007 to € 5.2 million in Q2 2008, an increase of 11%, with the underlying net profit margin decreasing from 61% in Q2 2007 to 58% in Q2 2008.
During the period under review the Company received orders for contracts worth € 6.5 million compared to € 10.8 million in the same period last year. The slowdown was due to the phasing of the order backlog which stands at € 39.5 million at the end of the quarter, compared to € 8.4 million in 2007 for the same period. Furthermore, order intake was affected by delays of government involvement in the negotiating process of new orders in the run up to the Olympic Games. The negotiation process of these projects is expected to resume rapidly following the end of the Olympic Games.
Furthermore, the Company achieved a solid rise in EPS which amounted to € 0.40 in Q2 2008, up from € 0.36 in Q2 2007.
The Company's net cash position as at 30 June 2008 was € 94.7 million compared to € 83.8 million on 31 December 2007. The Company retained most of the funding from IPO proceeds and is planning to use these funds to establish the Beijing plant and support various BOT projects scheduled to start in the second half of 2008.
During the period under review, as well as successfully consolidating its strong performance in the small and midsize incinerator market, the Company made important progress in the market for large-scale incinerators with power generation. ZhongDe Group continues to consider its human resources strategy as a pivotal factor in expanding business in this huge market.
The establishment of a postdoctoral research Chair within the Company in cooperation with a leading body in environmental protection will serve as an important stepping stone for the road ahead, especially in technology research and development. The Company anticipates a variety of scientific breakthroughs in R&D, which will strengthen its technological advantage.
CEO Zefeng Chen comments: "We are pleased that our Q2 2008 results reflect the continuous progress we make on our growth path step by step. They also highlight the push to strategically focus more strongly on larger municipal incinerators and gain economies of scale through centralised order processing. Our drive to strengthen our sales and marketing resources in combination with the huge potential offered by the Chinese waste incineration market gives us every confidence that shareholders will enjoy pleasing results by the end of 2008. We stick to our initial estimation that revenues for the full financial year 2008 are expected to amount to € 50 million with a net profit margin above 45%."
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