China Rerun Chemical Group Ltd Trading Statement (8188A)

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RNS Number : 8188A

China Rerun Chemical Group Ltd

25 February 2014

CHINA RERUN CHEMICAL GROUP LTD

("China Rerun", the "Company" or "Rerun")

Trading Update

China Rerun Chemical Group Ltd (CHRR.L), the producer of lubricant products for the People's Republic of China's ("PRC") domestic automotive, industrial and agricultural markets, makes the following update on trading for the three months from 1 September to 30 November 2013 (unaudited) ("the quarter" or the "period"), the Company's first trading quarter of the year ("Q1 2014").

-- Sales for the period grew by 51.41% from RMB54.82m (Q1 2013) to RMB83m (Q1 2014) and like-for-like sales volume was 4,046,711 litres, up 46.72%. It is important to note that Q1 2013 sales growth and volume was lower than expected and the Company does not expect such similar rates of quarter to quarter growth on a like for like basis going forward. However, the positive performance is encouraging and demonstrates the structure and growth plans the Company has put in place are working.

-- Gross margins were 28.8% for the period, a slight improvement on FY2013 of 26.1% (Q1 2013: 30.1%) as a result of increasing brand recognition and higher product quality allowing for sale price increases. The terms of the Company's contracts held with its distributors help to insulate its margins from inflationary pressure of raw material increases. In addition, as volumes continue to increase, the Company is benefitting from economies of scale.

-- The Company is pleased to announce a ten year joint partnership with Tianxia Runyuan (Beijing) Technolgy Co., Ltd("Tianxia") to sell Rerun branded products in approximately 300 new cities which are not currently covered by the Company's existing distribution network. Tianxia has an experienced management team with 15 years' experience in the lubricants industry and has developed a network of more than 600 distributors.

Commenting, Mr Xinghe Wu, Executive Chairman of China Rerun said:

"We have made a strong start to the new financial year driven by our product quality and high demand. The steps we have taken to reorganise our sales and distribution teams are now coming into effect and we are confident that we have a robust base to support increasing sales of our products and the future expansion of our business. We are optimistic about the sales potential of our new distribution agreement and we look forward to working with Tianxia to increase further our geographical presence and market share."

Indicative exchange rate as at 30 November 2013: GBP1: RMB 10.01

Source: www.oanda.com

For enquiries, please visit www.chinarerun.com/or contact:

 
 China Rerun                 Xinghe Wu                [phone] 
                              Yan Liu                  www.chinarerun.com/ 
                              Nick Lyth                [phone] 
--------------------------  -----------------------  ----------------------------- 
 Cairn Financial Advisers 
  LLP                        Jo Turner 
  (Nominated Adviser)         Liam Murray             [phone] 
--------------------------  -----------------------  ----------------------------- 
 Beaufort Securities 
  Limited                    Chris Rourke 
  (Broker)                    Guy Wheatley            [phone] 
--------------------------  -----------------------  ----------------------------- 
 Cardew Group                Shan Shan Willenbrock    [phone] 
  (Financial PR)              Georgina Hall 
                              Tom Horsman              [e-mail]. 
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Notes to Editors

China Rerun Chemical Group Ltd is an established and profitable producer of lubricant products for the PRC's domestic automotive, industrial and agricultural markets. Based in Daqing, northeastern China, it operates principally under the "Runyuan" and "Black E" brands. The Group's products are sold to end users through a network of third party distributors, some of whom operate branded automotive garages.

This information is provided by RNS

The company news service from the London Stock Exchange

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