Gushan Environmental (GU) Reports Mixed Results, Off 16%

Gushan Environmental (GU), a leading China biodiesel producer announced mixed earnings results this morning, matching EPS estimates of .01/share which is a big drop from the .20/share it reported one year ago.  Revenues came in about 10% lower than expectations at $40 million, nearly a 20% drop from the year ago period. 

Looking ahead, the company expects its new plants in Chongqing and Hunan to begin production next quarter and increase production at the Shanghai facility, targeted to take place in the 3rd quarter.  In early 2010, the Sichuan facility is expected to come online with annual capacity of 50K tons.

Gross margins for the company continue to come under pressure with the drop in world oil prices and the slowdown of the Chinese economy, however the price of diesel has begun to stabilize.  The company expects 2009 to be a very challenging year given the uncertain macro environment and will make modifications to its expansion plans if necessary.

“The impact of the global economic slowdown, falling world oil prices and contraction in China’s industrial production made for a very challenging environment during the first quarter and this was reflected in Gushan’s results,” said Jianqiu Yu, Chairman and Principal Executive Officer of Gushan. “While the global economic outlook remains uncertain, there are some signs that industrial activity in China is recovering and we believe that Gushan’s position as one of China’s leading biodiesel producers, strong financial position and strong customer and supplier relationships leave it well-positioned to benefit from any economic improvement.”

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