China Natural Gas said its revenue in the first quarter of 2012 increased by 33.9% to $32.28 million from $24.11 million in the first quarter of 2011, driven by the company’s LNG production facility in Jingbian County, Shaanxi Province, and the increase in the number of residential and commercial pipeline customers from 115,787 to 117,270 over the period.
Sales revenue of natural gas grew by 44.5% year-over-year to $29.40 million, from $20.35 million in the first quarter of 2011. Gasoline revenue in the first quarter of 2012 decreased by 36.8% to $0.83 million, from $1.31 million in the same period of the prior year, mainly because 3 gasoline stations were closed during the second quarter and fourth quarter of 2011. Installation and automobile conversion services revenue decreased by 16.4% year-over-year to $2.05 million, from $2.45 million a year ago. In the first quarter of 2012, sales of natural gas, gasoline, and installation and automobile conversion services contributed 91.1%, 2.6%, and 6.3% of total revenue, respectively.
Gross profit in the first quarter of 2012 increased 16.9% to $11.36 million from $9.72 million in the same period of the prior year. Gross margin in the first quarter of 2012 was 35.2%, compared to 40.3% a year ago. Gross margin decreased primarily due to the current lower gross margin level of our LNG business, as compared to the gross margins of those business lines making greatest contribution to revenue.
Operating income in the first quarter of 2012 was $3.70 million, an increase of 14.6% year-over-year from $3.23 million, primarily attributable to the realization of revenue and gross profit of LNG, which started in July 2011..
Income tax expense was $0.79 million at an effective tax rate of 28.9%, as compared to $0.96 million at an effective tax rate of 27.8% in the first quarter of 2011. The decrease was primarily due to lower income before income tax for the three months ended March 31, 2012 as compared to the three months ended March 31, 2011. The effective income tax rate increased from 27.8% to 28.9% over this period, primarily attributable to foreign currency exchange loss related to the Abax Senior Notes, which was not subject to income tax because we had incurred a net operating loss for income tax purpose for the three months ended March 31, 2012.
Net income in the first quarter of 2012 decreased by 21.6% to $1.95 million, or $0.10 per diluted share, from $2.49 million, or $ 0.12 per diluted share, in the first quarter of 2011.
As of March 31, 2012, the Company had $7.01 million of cash and cash equivalents on hand, compared to $9.62 million of cash and cash equivalents as of December 31, 2011. The decrease was primarily attributable to the construction of the LNG plant and other projects, and the repayment of the loans from Shanghai Pudong Development Bank and of the principal of the Abax Senior Notes.
Net cash provided by operating activities was $7.42 million for the first quarter of 2012, as compared to net cash provided by operations of $2.46 million for the first quarter of 2011. The increase was primarily due to the decrease in prepaid expense and other current assets, and increase in unearned revenue, and adjustments for non-cash expense items, including depreciation and amortization expenses, offset mainly by the increase in advances to suppliers and in other receivables.
[mappress] LNG World News Staff, May 15, 2012