SmartHeat Inc. Announces Financial Results for 2011
NEW YORK, April 2, 2012 /PRNewswire-Asia/ -- SmartHeat Inc. (NASDAQ: HEAT; website: www.smartheatinc.com), a market leader in China's clean technology, energy savings industry, today announced financial results for the fiscal year ended December 31, 2011.
Mr. James Jun Wang, Chairman and Chief Executive Officer of SmartHeat Inc., made the following comments regarding the performance of SmartHeat during the fiscal year of 2011:
"Despite a very challenging sales environment caused by a continuation of China’s restrictive fiscal policy in 2011, we are encouraged by our fourth quarter results due to our efforts to expand into regional areas of China, the development of our marketing force and our restructuring efforts. If not for one-time impairments to goodwill and inventory taken in the fourth quarter of 2011, our operating loss of $8.82 million for the fourth quarter would have resulted in operating income of approximately $3.77 million compared to operating loss of $2.54 million in the third quarter of 2011. While we wrote-down goodwill for the acquisition of Gustrower Warmepumpen GmbH (“SmartHeat Germany”) and Shenyang Bingchuan Refrigerating Machine Limited (“SmartHeat Pump”) in 2011, we still anticipate increased sales in the heat pump sector from these acquisitions over the long term, and we believe that they remain strategically important steps that should enable us to improve our market share for both our existing product lines and emerging energy-saving solutions. We expect that the Chinese government will continue to require the implementation of energy-saving policies to reduce emissions, which we believe will continue to increase the demand for our energy-saving products in all industrial sectors. We are optimistic about taking advantage of West China's economic development and urbanization trends throughout China as well as positioning ourselves as an international forward-thinking 'green' company.
"Our decrease in sales and deliveries in the fiscal year of 2011 compared to the fiscal year of 2010 resulted primarily from a continued slowdown in China’s general economy and demand in the heating-supply and other industrial market sectors, which caused the abandonment or postponement of certain projects by our customers. We have been actively combating the negative trend by maintaining our gross margin and expanding our sales efforts through the maturation of our sales force, increasing sales channels, improving cost controls, increasing prices and continuing to improve the efficiency of our manufacturing operations, which included staff reductions in certain plants."
In the fourth quarter of 2011, total sales increased to $33.68 million compared to $16.57 million in Q3 2011 due to seasonality factors, reinstated orders which were postponed or cancelled and our steps to increase sales of our PHE Units and PHEs by continuing our expansion into regional areas of China. We are encouraged by our progress in restructuring our business organization, integrating our heat pump manufacturing subsidiaries and improving operating efficiency.
Mainly due to goodwill impairment of $8.96 million taken in Q4 2011, we experienced an operating loss of $8.82 million in Q4 2011 compared to an operating loss of $2.54 million in Q3 2011 and a net loss for Q4 2011 of $9.59 million compared to net loss of $4.0 million for Q3 2011. If not for one-time impairments to goodwill and inventory taken in Q4 2011, our operating loss would have resulted in operating income of approximately $3.77 million in Q4 2011 compared to operating loss of $2.54 million in Q3 2011.