China Carbon Graphite (OTC BB:CHGI)

"We continued to focus on developing our higher margin business this past quarter and see an improvement of gross profit rate and a deduction of our general and administrative expenses," said Donghai Yu, Chief Executive Officer of China Carbon. "When comparing Q1 2011 with Q1 2012, we raised the percentage of our sales of fine grain and high purity graphite products, which are both higher margin products compared to our other business segment, graphite electrodes, while running at 75% of our 30,000 ton annual production capacity. Moreover, when further comparing these two quarters, raw material prices continued to increase, resulting in the average unit-selling price of our products increasing 49 percent with the average unit-selling price of our high purity graphite products increasing 47 percent in particular. We anticipated this trend and were able to offset rising graphite prices by making advance deposits to suppliers with available cash to lock in favorable prices."

Mr. Yu added, "While our increase in inventories this past quarter is a reflection of the rise in the cost of raw materials, it is also a result of an increase in the amount of our work in progress. Our high-end products made from fine grain and high purity graphite require longer production cycles, causing our work in progress to increase during the quarter. We feel comfortable with our order book that the robust demand for our fine grain and high purity graphite products will continue into 2012, and we anticipate that we will see improved demand for our ultra-high graphite electrodes during this time as well."

Business Outlook

"While we continue to grow our fine grain and high purity graphite businesses, we are confident that our top line results will be better in future quarters as the demand for graphite electrodes improves," commented Mr. Yu. "We project increasing demand in the fine grain, high purity and ultra-high power graphite electrode markets to continue in 2012, especially from China's evolving iron, steel, automobile, aerospace and defense industries. In particular, steel plants in China have been modernizing their current facilities with Electric Arc Furnaces, fueling the demand for large size ultra-high power graphite electrodes."

"Notably, the margin for large size ultra-high power graphite electrodes is high due to the shortage of supply compared to demand," remarked Mr. Yu. "Accordingly, we are working hard to get our new facility that specializes in the manufacture of fine grain and high purity graphite products completely up and running, as this facility will double our annual production capacity to 60,000 tons and will enable us to manufacture a new product: ultra-high power graphite electrodes with a diameter ranging from 600 to 800 millimeters. By improving our production capacity and capabilities in regards to these products, and by enhancing our ultra-high graphite electrodes business, we believe that we will see better financial results in upcoming quarters."

Fourth Quarter 2011 Results

• In Q4 2011, China Carbon had sales of $12.6 million compared to sales of $13.0 million in Q4 2010, a decrease of $0.4 million.
• In Q4 2011, China Carbon's net income was $1.1 million as compared to a net loss of $0.4 million in Q4 2010, a $1.5 million improvement.
• Adjusted EPS for fourth quarter 2011 was $0.06 vs $0.00 in prior year quarter.

"Our full year results in 2011 reflect the outstanding sales growth in our high purity and fine grain graphite products," said Donghai Yu, Chief Executive Officer of China Carbon. "For the year, our sales of these products rose 211 percent and 68 percent, respectively, and both products provided us with higher margins than our other business segment, graphite electrodes. We further improved our gross margin by making advance deposits to suppliers, offsetting the rises in graphite prices, and the manufacturing of solar and mold products increased the demand for our products as high performance raw materials."

"In 2012, we are very confident that we will boost our supply of high purity and fine grain graphite products," continued Mr. Yu. "We recently added a new facility that doubled our production capacity from 30,000 to 60,000 tons and is specializing in the manufacture of both these products. We delivered strong results this past year, achieving tremendous growth in our overall sales, gross profit and net income on the strength of our high purity and fine grain graphite sales, and we believe that we are poised to build on our success with the installation of this facility."

Business Outlook

"We believe that the future of graphite, especially when looking at it from the perspective of high-tech, high-demand applications, is very encouraging," said Mr. Yu. "Pebble-bed nuclear reactors, lithium ion batteries and solar panels are just some of the next generation technologies that make use of graphite's unique properties. In China, we are seeing the demand for graphite increase from the nation's developing iron, steel, automobile, aerospace and defense industries. To better take advantage of this evolving market, we are working hard to further enhance our product line."

"Specifically, our new plant has technologically advanced equipment capable of producing rounded fine grain electrodes with a diameter as large as 600 millimeters and ultra-high electrodes with a diameter as large as 800 millimeters," continued Mr. Yu. "Steel plants in China have recently been upgrading their furnace facilities, resulting in substantial increases in demand for large size ultra-high power graphite electrodes. Moreover, the margin for these products is high due to the shortage of supply compared to demand. Accordingly, we are striving to produce 800 millimeter diameter ultra-high graphite electrodes, as we believe selling this product could help us further strengthen our leading position in China's fine grain graphite market."

Mr. Yu further commented, "In 2012, we plan to continue adjusting our product mix towards our high purity and fine grain graphite products as a way to further improve our gross profit, and we are also looking to develop isostatic graphite products, including nuclear, solar and semiconductor products, to improve our margins as well. In regards to nuclear graphite, only graphite rods with a diameter of more than 840 millimeters and a purity of more than 99.99 percent may be used in nuclear power reactors and to date, we have produced samples that meet these standards. While we look to develop nuclear graphite and other isostatic graphite products, we are also seeking to acquire and vertically integrate a local graphite mine to supplement our operations. In the meantime, we will work towards maximizing our recently expanded production capacity to better position ourselves to meet potential rises in demand for our products. While 2011 was an excellent year for us in terms of financial growth and our development as a company, we are confident that we will make further progress in 2012, and solidify our position as one of China's premier graphite companies."

Third Quarter 2011 Results

• For the three months ended September 30, 2011, revenue increased 36%, from $10.0 million in Q3 2010 to $13.6 million in Q3 2011
  
• Adjusted EPS in third quarter 2011 was $0.05 vs $0.09

NEW YORK, Oct. 4, 2011 (GLOBE NEWSWIRE) -- China Carbon Graphite Group, Inc. (OTCBB:CHGI) ("China Carbon" or the "Company"), the largest wholesale supplier of fine-grain and high-purity graphite in China and one of the nation's top manufacturers of carbon and graphite products, today announced that videos showcasing the Company's latest manufacturing facilities are now available at:

http://s1219.photobucket.com/albums/dd423/ChinaCarbon/

The videos give viewers an in-depth look at China Carbon's new baking and dipping plants that will specialize in producing the Company's higher margin products made from fine grain and high purity graphite. Last quarter, the majority of China Carbon's revenues came from sales of its higher margin products and the Company's management team is confident that its new facilities will help China Carbon better meet the rising demand it is seeing for such products.

"Keeping investors, customers and potential clients apprised of what is happening within our Company is very important to us and we believe that these videos will allow those interested in China Carbon to get a better feel for the forthcoming operations at our new facilities. We expect that with the addition of these two plants, we will double our current production capacity that will, in effect, put us in a better position to supply more of our higher margin products, like large-size graphite electrodes, to many of China's fastest growing industries. This is a very exciting time for our Company and we want people interested in China Carbon to be able to see what steps we are taking to maintain our progress."

NEW YORK, Aug. 4, 2011 (GLOBE NEWSWIRE) -- China Carbon Graphite Group, Inc. (OTCBB:CHGI) ("China Carbon" or the "Company"), the largest wholesale supplier of fine-grain and high-purity graphite in China and one of the nation's top manufacturers of carbon and graphite products, today announced that operations at its new facility, which includes baking and dipping plants, will commence later this month and become fully operational by September 2011.

China Carbon has already completed installations at the facility as well as testing at the baking plant. The baking plant will go online later this month and testing at the extrusion press plant will be finished by September 2011 with operations beginning shortly thereafter, according to the Company's management team. Once the facility is completely up and running, China Carbon anticipates that it will have an annual production capacity of 30,000 tons, which would double the Company's current annual production capacity. With its expansion efforts, China Carbon looks to better position itself to meet the growing demand the Company is seeing for its higher margin products.

When compared to the first quarter of 2010, the Company's sales more than doubled in the first quarter of 2011, with 80 percent of its revenues coming from sales of its higher margin products. Accordingly, China Carbon plans to primarily manufacture its higher margin products, such as Ultra high power graphite electrodes and fine grain and high purity graphite products, at its facility.

Donghai Yu, China Carbon's Chief Executive officer, commented, "We want to diversify our products' applications and enter in as many markets as possible. Right now, we feel that we have an excellent opportunity to really enrich our business by providing more of our higher margin products to some of China's fastest growing industries, including the aerospace, defense, automotive, steel and clean-tech industries."

In particular, China Carbon anticipates maintaining and enhancing its supply of large size, ultra high power graphite electrodes to Chinese steel plants. Currently, the margin for large size, ultra high power graphite electrode is high due to the shortage of supply to demand. In an effort to take advantage of this trend, the Company is striving to become China first domestic producer of 800 mm diameter ultra high power graphite electrodes.

"Our ability to produce higher margin products is one of our key competitive advantages," added Mr. Yu. "Large size carbon and graphite manufacturing requires the most sophisticated technologies but can deliver us more than a 30 percent gross profit margin. We believe that we are already China's leading manufacturer of large size carbon and graphite products, and through our capacity expansion and product development, our goal is to enhance our production of these products and gain further leverage in the market."

First Quarter Results:

• Revenue increased 137%, from $4.85 million in Q1 2010 to $11.46 million in Q1 2011
• EBITDA improved 155% from $0.99 million in Q1 2010 to $2.52 million in Q1 2011
• Net income grew 139%, from ($0.86 million) in Q1 2010 to $0.33 million in Q1 2011
• Adjusted net income rose 91%, from $0.33 million in Q1 2010 to $0.63 million in Q1 2011
• Adjsuted EPS was $0.03 vs. $0.02

Donghai Yu, China Carbon's CEO, said, "As we expected, our first quarter results were excellent. In particular, we are very pleased with the significant improvement in our EBITDA, which increased 154 percent. We successfully adjusted our product mix in the first quarter of 2011 to capitalize on market demand, producing and selling more of our higher margin products, like high purity graphite, than our lower margin products, such as graphite electrodes. Notably, our sales benefited from the increasing applications for our higher margin products in China's rapidly developing solar and mold industries."

NEW YORK, May 5, 2011 (GLOBE NEWSWIRE) -- China Carbon Graphite Group, Inc. today announced that the Company anticipates reporting a considerable increase in revenue for the first quarter of 2011 as compared with the same quarter of 2010.

China Carbon's preliminary, unaudited revenue during the first quarter of 2011 was approximately $11.6 million USD, reflecting an increase of approximately $6.7 million USD or 138%, when compared to revenue of $4.8 million during the first quarter of 2010. This substantial improvement in revenue is due to its doubled capacity and the significant increase in the sales of its high margin products.

Industrial Minerals recently reported that the price range for industry standard large flake high carbon graphite has risen from $2,050-$2,500 per ton to $2,275-$3,000 per ton. In the third and fourth quarters of 2010, China Carbon accurately projected that the per ton graphite price would increase within this range.

Anticipating these price increases, after securing a $27 million USD loans from the Construction Bank of China, China Carbon purchased additional levels of inventory and paid advances to suppliers to lock in the price of its raw materials. This well-timed strategic move has China Carbon expecting improved gross margins for the first quarter of 2011 as well as considerable full year increases.

The notable rise in the commodity prices associated with carbon graphite is being driven in large part by the mounting demand for carbon graphite, which is in turn being driven by increased manufacturing associated with global economic growth. At this time, China Carbon plans to accommodate by expanding its current operations and the Company estimates that the construction of its new baking plant—which is expected to boost its annual production capacity from 30,000 tons to 60,000 tons—will be completed by June 2011 and fully operational by August 2011, subject to potential delays involved in construction, installation or production involved in the development of a new manufacturing facility. The Company is currently running at 100 percent capacity.

Full Year 2010 Results:

• Revenue increased 102%, from $15.4 million in 2009 to $31.0 million in 2010
• Gross profit increased 218%, from $2.2 million in 2009 to $6.9 million in 2010
• Gross profit rate increased 57.86%, from 14.17% in 2009 to 22.36% in 2010
• Operating income increased 383%, from operating loss of ($0.9 million) in 2009 to operating income of $2.4 million in 2010
• Net income increased 194%, from net loss of ($1.5 million) in 2009 to net income of $1.4 million in 2010
• EPS of $0.06 vs. ($0.16), up 138%

"We are thoroughly pleased that the Company's operations generated such robust growth and excellent results in 2010," said Donghai Yu, Chief Executive Officer of China Carbon. "We are especially proud to have increased our net income by over 190 percent and operating income by over 380 percent compared to 2009. We are glad to see increased revenue from expanded customer base due to market recovery and doubled production capacity, improved margin due to a higher margin product mix, as well as strong financing support from banks."

Mr. Yu explained that China Carbon is positioned for excellent results in 2011 and for future growth in the coming years as the Company plans to expand production capacity by as much as 100% in 2011. Mr. Yu stated, "Our new facility which is expected to start operating around August 2011 will increase the production capacity of our higher margin products. The Company also has plan to actively seek opportunities to integrate vertically with raw material providers to help to save the raw material cost and thus to improve the gross profits."

The Company expects that the increased demand for its higher margin products of fine grain graphite and high purity graphite will extend through 2011, primarily due to anticipated growth in China's automobile, aerospace, defense, iron and steel industries. China Carbon also expects that relatively lower margin products of graphite electrodes will continue to experience increased demand in 2011. The Company anticipates that cash flow from operations will continue to increase with enhanced sales, improved accounts receivable collection and less bad debt expenses for accounts receivable allowances.

Third Quarter 2010 Highlights

• Revenue was $9,979,707, up 78.8% from the same quarter of 2009.
   
• Gross profit was $2,474,084, up 62.2% from the third quarter of 2009.

• Gross margin of 24.8%, slightly decreased 2.5% from 27.3% for the third quarter of 2009.
   
• Net income was $1,900,563, an increase of $965,298 or 100% from the third quarter 2009.

• Earnings per diluted share were $0.09 vs. $0.06.

"We are pleased to announce solid financial results and robust growth in the quarter," Donghai Yu, CEO of the Company commented. "Our Third Quarter results came in strong as anticipated, we experienced 78.8% growth in our revenues year over year. Due to our long production cycle, in the quarter, we began to deliver most of the orders we received at the beginning of this year. We expect to see increased demand in higher margin ultra purity graphite electrode, fine grain and high purity graphite product lines. We see this demand extending through 2010 and into 2011, primarily due to anticipated growth in the automobile, aerospace, defense, iron and steel industries in China. Thus far, in 2010, we have doubled our capacity from 15,000 tons to 30,000 tons. We have also begun construction on a new 30,000 ton facility to meet the increasing demands of our customers. Additionally, we have sufficient capital to fund all of our raw material needs for our new capacity expansion through our RMB 180 million loan from China Construction Bank."

"We have recently increased our customer base and expect to establish long term relationships with each new customer. In turn we believe this will further strengthen our robust revenue growth in the future," Mr. Yu continued.

GeoTeam® Note:  CHGI included an other income line item in its filings.  Investors should eliminate this figure for a more accurate picture of CHGI's performance.  Doing so yields EPS of $0.06 for the 2010 third quarter.