China Natural Gas Q4 Revenue Up

China Natural Gas said that its revenue in the fourth quarter of 2011 increased 32.4% to $35.9 million from $27.1 million in the fourth quarter of 2010, primarily attributable to the realization of revenue from LNG, which started in July 2011, and increase in average unit selling price of CNG sold through our fueling stations.

Sales of natural gas grew approximately 43.5% year-over-year to $31.3 million, from $21.8 million in the fourth quarter of 2010, mainly due to the company’s LNG business. Gasoline revenue in the fourth quarter of 2011 decreased 42.9% to $1.2 million, from $2.1 million in the prior year’s period, because of the closure of six of the company’s eight gasoline fueling stations during the fourth quarter of 2010 and the fourth quarter of 2011. Installation and services revenue increased 6.1% year-over-year to $3.4 million, from $3.2 million a year ago. In the fourth quarter of 2011, sales of natural gas, gasoline, and installation and other services contributed 87.2%, 3.4%, and 9.4% of total revenue, respectively.

Gross profit in the fourth quarter of 2011 expanded 15.7% to $13.1 million, from $11.3 million in the same period of 2010, driven by the increase in sales revenues. Gross margin in the fourth quarter of 2011 was 36.5%, compared to 41.7% a year ago, primarily due to the current lower gross margin level of the company’s LNG business, as compared to the gross margins of those business lines making greatest contribution to revenues, and the growth rate of sales price of natural gas products being lower than that of the purchase costs of natural gas.

In total, operating expenses in the fourth quarter of 2011 increased by approximately $2.5 million to $7.8 million, from $5.3 million in the same period of 2010. Operating income in the fourth quarter of 2011 was $5.3 million, a decrease of 11.9% year-over-year, from $6.0 million in the same period of 2010.

During the quarter, the company recognized $281 of non-cash gain from the change in the fair value of warrants, compared to $285,569 in the fourth quarter of 2010. Income tax expense was $1.3 million at an effective tax rate of 24.8%, as compared to an effective tax rate of 17.4% in the fourth quarter of 2010. Net income in the fourth quarter of 2011 decreased 24.5% to $3.8 million, or $0.17 per diluted share, from $5.1 million, or $0.24 per diluted share, in the fourth quarter of 2010, primarily due to the increase in the average unit purchasing costs of natural gas at a higher rate than that of our sales prices, a lower gross margin generated from the LNG sales, and increased operating expenses.

Excluding the impact of the non-cash expenses, adjusted net income was $3.8 million, versus $4.8 million in the fourth quarter of 2010. For the fourth quarter of 2011, adjusted earnings per diluted share was $0.17, versus $0.23 per diluted share in the fourth quarter of 2010.

Mr. Shuwen Kang, CEO of China Natural Gas, commented: “We are very pleased with our strong growth and profitability for the fourth quarter and full year 2011. During this quarter, we increased our number of pipeline customers to 116,790, and we have expanded into liquefied natural gas (LNG) business. We continued to see higher sales volumes resulting from the increasing number of hybrid vehicle fleet and municipal vehicles in the city of Xi’an, which utilize compressed natural gas as a cleaner, cheaper and more efficient fuel alternative. We believe our strong performance in 2011 demonstrated the long-term market potentials for our CNG gas stations as well as our LNG business, piped natural gas and installation services for residential, commercial and industrial customers.”

[mappress]
LNG World News Staff, April 3, 2012