Sino-Global Results for Q2 2009

Tuesday, February 17, 2009

Sino-Global Shipping America, Ltd. (NASDAQ:SINO) a leading, non-state-owned provider of shipping agency services operating primarily in China, announced selected unaudited financial results for its second fiscal quarter of 2009 ended December 31, 2008.

Highlights for the second quarter of 2009:

  • Revenues were US$4.5 million, an increase of 7.7% from $4.2m in the second quarter of 2008.
  • Gross margin was 9.4%, compared to 20.9% in the second quarter of 2008.
  • Basic and diluted losses per share were US$0.30, compared to basic and diluted earnings per share of US$0.20 in the same period in 2008.
  • Despite the global economic downturn, the number of ships served increased to 47 from 44 in the second quarter of 2008.
  • On October 9, 2008, Sino-Global announced a program authorizing the company to repurchase up to 10% of its outstanding common stock over a 12-month period. As of December 31, 2008, Sino-Global had repurchased 55,100 shares. These purchases reflect the Company's confidence in its future growth prospects.


Mr. Cao Lei, Sino-Global's chief executive officer, said ''The second quarter proved to be a challenging one as the global economic crisis continued to take a toll on global demand for commodities and shipping to and from China. Despite this, we are seeing the results of our expansion strategy, which kept our top line growing in the face of challenging macro conditions. In addition to strategically expanding our business to better serve our clients, we are taking the necessary measures to reduce costs. In fact, we made a number of tough decisions during the quarter, including cutting 20 percent of our work force, decreasing executive salaries and moving into less expensive office space. We believe that these initiatives along with the Central government's fiscal and monetary measures will improve our bottom line in the quarters to come.''

Revenues were $4.5m in the second quarter of 2009, an increase of 7.7% from $4.2m in the second quarter of 2008. As a result of the current global economic downturn, fewer ships carried goods to and from China compared to the same period in 2008. Despite the downturn, the number of ships the company served increased slightly year over year from 44 in the second quarter of 2008 to 47 in the second quarter of 2009. The company's newly opened Australia office contributed nine ships to the total. Sino-Global expects that it will continue to earn a substantial majority of its revenues from shipping agency services. The company has placed considerable focus on the promotion of its shipping agency services business in recent quarters and intends to expand its business scope to related and complementary areas in order to meet growth targets.

Costs of services were $4.1m in the second quarter of 2009, an increase of 23.4% from $3.3m in the second quarter of 2008. Costs of services increased faster than revenues, which was due in part to the depreciation of the U.S. dollar against the Chinese yuan (''RMB'') in the same period, from RMB7.4300 to US$1.00 in the three months ended December 31, 2007 to RMB6.8390 to US$1.00 in the three months ended December 31, 2008, an 8.64% percent average year-over-year depreciation of the U.S. dollar against the RMB. Costs of services also increased due to overtime pay made to employees at local ports during the National Day holiday in October.

Gross profit was $0.4m in the second quarter of 2009, a decrease of 51.9% from $0.9m in the second quarter of 2008. Gross margin was 9.4% in the second quarter of 2009, compared to 20.9% in the second quarter of 2008.

General and administrative expenses were $1.2m in the second quarter of 2009, an increase of 105.3% from $0.6m in the second quarter of 2008. The increase in general and administrative expenses was mainly due to salary expenses used to attract and retain high-caliber personnel, expenses related to becoming a public company, expenses related to business expansion and the implementation of a new information management system, office rental expenses and expenses for legal, accounting and other professional services.

Selling expenses were $142k in the second quarter of 2009, an increase of 214.2% from $45k in the second quarter of 2008, largely due to increased business promotion and travel expenses as well as expenses related to the Company's recently opened Hong Kong and Australia offices.

Operating loss was $0.9m in the second quarter of 2009, compared to operating income of $0.3m in the second quarter of 2008. Operating margin was -19.6% in the second quarter of 2009 compared to 6.3% in the same period in 2008.

Financial expenses were $90k in the second quarter of 2009, compared to financial income of $67k in the second quarter of 2008. Financial expenses in the second quarter were largely due to foreign exchange losses recognized in the condensed consolidated financial statements, especially for holdings in Australian dollars.

Income tax expenses were $154k in the second quarter of 2009, compared to an income tax benefit of $89k in the second quarter of 2008.

Net loss was US$0.9m in the second quarter of 2009, compared to net income of $0.4m in the second quarter of 2008. Net margin was -20.1% in the second quarter of 2009, compared to 8.8% in the second quarter of 2008.

Basic and diluted losses per share in the second quarter of 2009 were $0.30, compared to basic and diluted earnings per share of $0.20 in the same period in 2008.

As of December 31, 2008, the company had $7.7m in cash and cash equivalents and short-term investments, compared to $9.6m as of June 30, 2008. Net cash used in operating activities and capital expenditures for the second quarter of 2009 was $1.5m and $0.2m, respectively.

Sino-Global maintains its full-year 2009 guidance with revenues expected to be in the range of $22.6m to $24.9m, representing annual growth of 50% to 65% over 2008. This forecast is a current and preliminary view and is subject to change.

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