President of China Linen pleased with financial results for 2009
China Linen Textile Industry, Ltd., a China-based company engaged in the production and sale of linen yarn and various types of linen fabric, announced its financial results for the year ended December 31, 2009.
Revenue for the year ended December 31, 2009 totaled $29.4 million, up approximately 28.1% from $22.9 million for the year ended December 31, 2008. The company added 7 customers during 2009 and increased sales by 5% in new geographic areas. The increase in revenue was primarily attributable to increased sales volume of linen fabric.
Cost of Goods Sold
Cost of goods sold amounted to $20.7 million for 2009, or 70.4% of revenues, compared to $17.6 million, or 76.9%, of revenues for 2008. The Company was able to drive down cost of materials by further development of the Company's proprietary technology reducing the amount of raw material lost in production process, improving production efficiency and resulting in a product mix with higher gross margins. The Company anticipates that cost of goods sold will remain consistent with 2009 levels or be lower during 2010 due to economies of scale due to the expanded capacity.
Gross profit for 2009 was $8.7 million, up 64.5% from $5.3 million for 2008. The increase in gross profit was mainly attributable to increased sales in 2009, and to revenue-per-unit outpacing costs. Gross margin for the year ended December 31, 2009 was approximately 29.6% as compared to gross margin of approximately 23.1% for the year ended December 31, 2008.
Operating expenses decreased 25.2% to $1.6 million in 2009 from $2.2 million in 2008, which included approximately $0.8 million, or 43.1%, in stock-based compensation which was not present in 2009. Management was able to prudently manage expenses and was able to increase volume.
Operating Income increased 127.5% to $7.1 million for 2009 and operating margins were 24.1% compared to 13.6% in 2008.
Other income decreased by 16.5% to $0.8 million for the year ended December 31, 2009 from $1.0 million in the year ago period as a result of decrease in government subsidies received by Lanxi Sunrise, the majority-owned subsidiary through which China Linen conducts all of its business operations. During 2009 and 2010, Lanxi Sunrise received or expects to receive government subsidies on local income taxes paid equal to 40% of its total annual income tax paid for each such year.
Provision for Taxes
Provision for taxes was $2.1 million for 2009, as compared to $1.2 million for 2008, an increase of approximately 77.5%, with an effective tax rate of 27.2% and 29.7% in each respective period.
Net income was $5.7 million for the year ended December 31, 2009 as compared to $2.9 million for the year ended December 31, 2008, representing an increase of approximately 100.6%. Earnings per share in 2009 amounted to $0.28, up 86.7% from $0.15 in 2008, based on weighted average shares outstanding of 20.1 million and 19.5 million respectively.