Gongyou Machines Ltd.
Gongyou Machines Ltd.: Losses in Jul-Dec 2008 Period
Gongyou Machines Ltd. / Half Year Results Release of a Corporate News, transmitted by DGAP - a company of EquityStory AG. The issuer / publisher is solely responsible for the content of this announcement. ---------------------------------------------------------------------- Gongyou Machines Ltd. - Losses in Jul-Dec 2008 Period The global crisis has affected us during the reporting period Jul-Dec 2008 (first half of the financial year 2009 ending on 30.06.2009) in multiple ways. Export sales dropped dramatically, and domestic sales, mainly to Chinese furniture manufacturers, also declined, because furniture exports dropped.In RMB Jul-Dec 2008 Jul-Dec 2007 change (decline)in % Revenue 62,590,700 93,304,700 ( 32.92) Gross Profit 2,498,400 22,785,400 ( 89.04) Gross Margin 3.99% 24.42% Total Expenses 8,589,329 7,852,695 +9.38 Other Income 22,657 59,736 ( 62.07) (Loss) / Profit Pre-Tax (5,871,472) 15,377,341 (138.18) (Loss) / Profit After (5,871,472) 13,515,041 (143.44) TaxHigh raw material costs during the early months of the reporting period, based on purchases made in summer 2008, led to a strong decline in gross margin. Higher distribution expenses, necessary to incentivize domestic distributors, led to a small overall increase in expenses, in spite of falling administrative costs. In the subsequent half year, Jan-June 2009, the demand situation remained difficult. We noticed a slight improvement in the domestic market towards the end of the subsequent period. We expect a substantial improvement of the demand situation for exports only in case of an economic recovery in our main export markets, such as Russia, ASEAN and Latin America. While the first early signs of such improvement appear on the horizon, the trend is not clear yet. We expect a stable or slight improvement in the domestic market in the near future. Due to our strong balance sheet, Gongyou's operations and stability are not endangered by the losses during the reporting period. Gongyou has the reserves to withstand the actual strong cyclical downturn. Gongyou also internally discusses measures to improve the shareholder value. Xavier Hou Gongyou Machines Ltd. No.689 Qingdao South Road Weihai City, Shandong Province, People's Republic of China Postal Code: 264200 Telephone: (86) 631 5366696 Fax: (86) 631 5364880 E-Mail: export@gongyou.com 02.07.2009 Financial News transmitted by DGAP ----------------------------------------------------------------------
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