PR Newswire
LISHUI, China, Dec. 22, 2016
LISHUI, China, Dec. 22, 2016 /PRNewswire/ -- Tantech Holdings Ltd. (NASDAQ:TANH), ("Tantech" or the "Company"), a leading manufacturer of bamboo-based charcoal products, today announced its financial results for the six months ended June 30, 2016.
Six-Month 2016 Financial Highlights
| For the Six Months Ended June 30, | ||||
($ millions, expect per share data) | 2016 | | 2015 | | % Change |
Revenues | $22.8 | | $30.4 | | -25% |
Consumer product | $18.7 | | $21.1 | | -11.4% |
Trading | $0.2 | | $3.3 | | -93.3% |
Energy | $3.8 | | $6.0 | | -36.7% |
Gross profit | $6.0 | | $9.8 | | -38.8% |
Gross margin | 26.3% | | 32.1% | | -18.7% |
Operating margin | 10.8% | | 18.8% | | -42.6% |
Net income attributable to stockholders | $1.5 | | $4.9 | | -69.4% |
Basic/ Diluted earnings per share | $0.07 | | $0.23 | | -69.6% |
"Although the overall revenue declined, our traditional core businesses, in particular the sales of household products, still recorded strong growth. The Company maintained stable operations in the first half of this year. During the reporting period we reached an agreement to acquire Suzhou E-Motors Co. Ltd. Currently we are in the midst of transformation, and have taken a series of measures to lay a solid ground for future development," said Mr. Wang Zhengyu, Chairman and Chief Executive Officer of Tantech.
"First, we have gradually increased the share of wholesalers in our distribution network while reducing the share of supermarkets to improve our bargaining power. Before, the company mainly sold its products through supermarkets, and the high reliance on supermarkets undermined our bargaining power. Second, China has shut down a large number of small manufacturers of charcoal kilns in recent years amid its fight against air pollution. The massive closure has had a negative impact on our upstream suppliers. To fend off the impact, the company has been exploring a variety of ways to ensure the supply of raw materials. Finally, the company is working closely with Suzhou E –Motors towards completion of the transaction. However, the delay in ownership transfer has slowed our acquisition of Suzhou E-Motors. "
Looking ahead, Mr. Wang said: "In the future, the company will continue to reduce the share of supermarkets in our distribution network and increase the share of wholesalers. In particular, we will ramp up marketing efforts in third- and fourth-tier small Chinese cities. Meanwhile, we will quicken the buildup of E-commerce platform to improve the company's brand image. Just weeks ago the company released upgraded bamboo charcoal bedding articles, which have stronger absorption capacities compared to the predecessors. In the future we will keep spending on research to develop more high-value added products. In addition, we will seek opportunities to cooperate with other consumer product manufacturers, and may acquire some of them to expand our business."
Mr. Jing Jin, Chief Financial Officer of Tantech, added: "In the first half of this year, intensifying competition between traditional supermarkets and E-commerce platforms like Taobao.com and 360buy.com drove down the company's gross margin and slowed cash inflow. However, in the second half, a traditional high season for consumer products, we expect our cash inflow and financial performance to improve by the end of 2016."
Six-Month 2016 Financial Results
Revenues
Total revenues decreased by $7.6 million, or 25%, to $22.8 million for the six months ended June 30, 2016 from $30.4 million for the same period of last year. The decrease was primarily attributable to the decreased sales from our trading segment and energy segment and partially a few specific types of products will discuss in below.
| For the Six Months Ended June 30, | ||||||||||
| 2016 | | 2015 | ||||||||
| Revenues | | Gross Profit | | Gross | | Revenues | | Gross | | Gross |
Consumer product | 18,748 | | 5,507 | | 29.4% | | 21,121 | | 8,060 | | 38.2% |
Trading | 221 | | 42 | | 19.1% | | 3,290 | | 52 | | 1.6% |
Energy | 3,820 | | 450 | | 11.8% | | 5,984 | | 1,657 | | 27.7% |
Total | 22,789 | | 5,999 | | 26.3% | | 30,395 | | 9,769 | | 32.1% |
Revenues for consumer product segment decreased by $2.4 million, or 11.4%, to $18.7 million for the six months ended June 30, 2016 from $21.1 million for the same period of last year. The decrease was primarily attributable to decreased sales for our quick burning charcoal products. There was no sale on quick burning charcoal product in the first half of 2016 compared to $5.3 million for the same period of last year, due to close down of one major supplier for local environmental control. However, it showed 25.8% of increasing sale on household products. We sold approximately 2.5 million pieces of air purification products and 3.7 million pieces of deodorization products for the six months ended June 30, 2016, compared to approximately 1.6 million and 3.2 million pieces, respectively, for the same period of last year. The average selling prices of air purification and deodorization products decreased by 8.2% and 2.5%, respectively for the six months ended June 30, 2016 compared to the same period of last year.
Revenues for trading segment decreased by $3.1 million, or 93.3%, to $0.22 million for the six months ended June 30, 2016 from $3.3 million for the same period of last year. This decrease was attributable to company sale strategy change to drop off in trading sales for third party produced charcoal products which does not generate profits. Therefore, the gross margin in trading segment increased sharply from 1.6% to 19.1% for the six months ended June 30, 2016.
Revenues for energy segment decreased by $2.2 million, or 36.7%, to $3.8 million for the six months ended June 30, 2016 from $6.0 million for the same period of last year. The decrease was primarily attributable to decreased sales of EDLC carbon in the six months ended June 30, 2016. We sold 127 tons of EDLC carbon for the six months ended June 30, 2016, compared to 175 tons for the same period of last year. The average selling price of EDLC carbon decreased by 18.4% to $26,551 per ton for the six months ended June 30, 2016 from $32,535 per ton for the same period of last year.
Cost of revenues
Total cost of revenues decreased by $3.8 million, or 18.6%, to $16.8 million for the six months ended June 30, 2016 from $20.6 million for the same period of last year. As a percentage of revenues, the cost of revenue increased by 5.8 percentage points to 73.6% for the six months ended June 30, 2016 from 67.9% for the same period of last year.
Gross profit
Total gross profit decreased by $3.8 million, or 38.8%, to $6.0 million for the six months ended June 30, 2016 from $9.8 million for the same period of last year. Gross margin was 26.3% for the six months ended June 30, 2016, compared to 32.1% for the same period of last year. On segment basis, gross margins for consumer product, trading, and energy were 29.4%, 19.1%, and 11.8%, respectively, for the six months ended June 30, 2016, compared to 38.2%, 1.6%, and 27.7%, respectively, for the same period of last year.
Operating expenses
Selling expenses decreased by $0.05 million, or 11%, to $0.39 million for the six months ended June 30, 2016 from $0.44 million for the same period of last year. As a percentage of revenues, selling expenses increased to 1.7% of revenues for the six months ended June 30, 2016, as compared to 1.4% for the same period of last year. The increase was primarily attributable to higher shipping expenses for the six months ended June 30, 2016 as compared to the same period of last year.
General and administrative expenses decreased by $0.03 million, or 1.2%, to $2.9 million for the six months ended June 30, 2016 from $2.9 million for the same period of last year.
Research and development expenses decreased by $0.4 million, or 61.3%, to $0.3 million for the six months ended June 30, 2016 from $0.7 million for the same period of last year. The decrease was attributable to the completion of R&D project in late 2015.
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