VANCOUVER, Aug. 13 /CNW/ - Zongshen PEM Power Systems Inc. ("ZPP" or the
"Company") (TSX:ZPP), today announced its financial results for the
three-month and six-month periods ended June 30, 2009. All currency amounts
referred to in this news release are in Canadian dollars unless stated
For the three-month period ended June 30, 2009, the Company reported
revenues of $5.3 million versus $7.1 million in the corresponding quarter a
year ago. Volume sales during the second quarter of 2009 totalled 14,153
units, compared with 22,715 units in the second quarter of 2008. Second
quarter results continued to be negatively impacted by the lack of unit sales
due to lack of consumer spending in China, and lower export volumes. As a
result of lower volume sales and ongoing fixed costs leading to lower capacity
utilization, gross margin during the quarter decreased to 7 percent versus 16
percent during the corresponding period in 2008. During the quarter, the
Company reported a net loss amounting to $943,890 or $0.01 per share, versus a
net income of $484,553 or $0.01 per share for the second quarter of 2008.
For the six-month period ended June 30, 2009 the Company reported
revenues of $13.1 million versus $13.6 million in the corresponding period a
year ago. Volume sales during the first six-month period in 2009 totalled
35,273 units, compared with 46,128 units during the same period in 2008.
During the six-month period, the Company reported a net loss of $801,257, or
$0.01 per share, versus a net income of $360,175, or $0.01 per share.
At June 30, 2009, the Company was debt free with cash and cash
equivalents amounting to $39.5 million, compared to $41.6 million at March 31,
2009 and $33.3 million at December 31, 2008. During the quarter, the Company
deployed $1.9 million towards the construction of its Chongqing production
facility. The Company's strong balance sheet enables ZPP to weather the
current economic downturn while having the ability to explore and complete
select partnerships and acquisitions.
"We continued to experience the negative impacts of the market downturn
in our business during the quarter, however we initialized a restructuring
initiative at the operational level which is expected to drive efficiencies
and growth once consumer demand for premium bikes and scooters return to
historical levels," noted Zongshen Zuo, Chairman and CEO of Zongshen PEM Power
Systems Inc. "We continue to be optimistic that the second half of 2009 will
demonstrate much stronger demand and performance as our main markets and
distributors demand more product. We are also hopeful to secure certain
strategic partnerships which will allow ZPP to enjoy improved capacity
utilization and ramp up revenues through market share gain."
ZPP continues to expect 2009 to be a challenging year for the organic
growth of its bike and scooter products. Based on the current business
climate, the Company expects lower revenues and sales volume in 2009 compared
to the results achieved in 2008. However, the Company is well positioned to
advance its growth strategy with a solid foundation in e-bikes and small gas
bikes, a strong balance sheet, a large market for its products and a major
shareholder and partner with assets and resources that can be leveraged to
gain competitive advantages. The Company continues to evaluate and review
strategic growth opportunities through partnerships and acquisitions, which
would complement its existing business.
The Company will host a conference call on Friday, August 14, 2009 at
11:00 a.m., Eastern Standard Time (EST) to further discuss the second quarter
2009 financial and operational results.
Dial in information is as follows:
Dial in number: 1-888-609-5696 (North America) or 1-913-312-1495
Taped Replay: 1-888-203-1112 (North America) or 1-719-457-0820
Taped Replay Pass Code: 2887475 (Available until August 28, 11:59 p.m.
Live Webcast Link: www.zongshenpem.com
About Zongshen PEM Power Systems Inc.
Zongshen PEM Power Systems Inc. is a public company trading under the
symbol ZPP on the Toronto Stock Exchange. The Company is engaged in the
commercialization of alternative power systems including batteries, fuel cells
and solar power, for a variety of consumer and industrial applications. The
Company manufactures low-cost, high quality, environmentally friendly small
gas motorbikes, electric motorcycles, electric bicycles and other e-vehicles
in China for the Chinese domestic and international markets. Zongshen PEM
Power System's largest shareholder is Zongshen Industrial Group, one of
China's largest manufacturers and distributors of motorcycles, engines, and
Forward Looking Information
This release contains forward-looking statements, which may be identified
by statements containing the words "will", "anticipate", "expect", "intend"
and other similar expressions. These statements are based on certain factors
and assumptions including foreign exchange rates, expected growth and sales,
results of operations, performance, and business prospects and opportunities
and effective income tax rates. While the company considers these factors and
assumptions to be reasonable based on information currently available, they
may prove to be incorrect. Several factors could cause actual results to
differ materially from those in the forward-looking statements, including, but
not limited to: our relationship with Zongshen Industrial Group; fluctuations
in market demand for small gas motorbikes and e-bikes; changes in competitive
pressures, including pricing pressures; timing and amount of capital
expenditures; changes in financial and capital markets and corresponding
effects on the company's investments; changes in currency and exchange rates;
and the effects of government policy and regulations;. Additional risks and
uncertainties can be found in our MD&A for the interim period ended June 30,
2009 and in our other filings with the Canadian securities commissions.
Forward-looking statements are given only as at the date of this release and
the company disclaims any obligation to update or revise the forward-looking
statements, whether as a result of new information, future events or
otherwise, except as required by law.
For further information:
For further information: Ali Mahdavi, Zongshen PEM Power Systems Inc.,
Vice President, Corporate Finance & Investor Relations, (416) 962-3300,