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WSP Holdings Announces Fourth Quarter and Full Year 2008 Results

March 11, 2009

WUXI, China, March 11 /PRNewswire-Asia-FirstCall/ — WSP Holdings Limited
(NYSE: WH) (“WSP Holdings” or the “Company”), a leading Chinese manufacturer
of API (American Petroleum Institute) and non-API seamless casing, tubing and
drill pipes used in oil and natural gas exploration, drilling and extraction
(“Oil Country Tubular Goods” or “OCTG”), and other pipes and connectors, today
announced its unaudited financial results for the fourth quarter and fiscal
year ended December 31, 2008.

    Fourth Quarter 2008 Highlights
    -- Net revenue was $299.3 million, an increase of 130.4% from the fourth
       quarter of 2007
    -- Gross profit was $56.0 million, an increase of 68.5% from the fourth
       quarter of 2007
    -- Gross margin was 18.7%, compared to 25.6% in the fourth quarter of 2007
    -- Income from operations was $30.9 million, an increase of 34.7% from the
       fourth quarter of 2007
    -- Net income was $27.8 million, up 65.9% from $16.7 million in the fourth
       quarter of 2007
    -- Basic and diluted earnings per American Depository Share ("ADS," each
       ADS represents two ordinary shares) were both $0.27 for the fourth
       quarter of 2008, compared to $0.20 for both in the fourth quarter of
       2007
    -- Won several supply contracts in February 2009 for a total of 142,777
       tonnes of OCTG products to Chinese domestic oil and gas companies

    Full Year 2008 Highlights
    -- Net revenue was $912.1 million, an increase of 88.5% from 2007
    -- Gross profit was $208.6 million, an increase of 65.8% from 2007
    -- Gross profit margin was 22.9%, compared to 26.0% in 2007
    -- Income from operations was $146.6 million, an increase of 41.6% from
       2007
    -- Net income was $99.3 million, an increase of 33.2% from 2007
    -- Basic and diluted earnings per ADS were both $0.97, unchanged from 2007
    -- WSP China was granted High and New Technology Enterprise status by the
       Chinese government, which reduced WSP China's income tax rate from the
       uniform rate of 25% to a preferential rate of 15%

“In this quarter, despite a weak global economic environment, we
experienced significant growth of our API business and continued to see solid
growth in sales for our non-API products,” commented Mr. Longhua Piao, the
Chairman and CEO of WSP Holdings. “Our marketing and sales strategy at the
beginning of 2008 emphasized international sales of OCTG products because of
strong overseas demand for high-end non-API products and higher export prices
for API products compared to Chinese domestic market prices for API products.
In response to weakening international demand for OTCG products, we adjusted
our strategy by concentrating on sales of OCTG products to domestic customers
in the fourth quarter of 2008.”

“Changes in our sales mix to the Chinese domestic market helped offset
some of our sales decreases in international markets. Raw material costs
decreased towards the end of the fourth quarter of 2008, while our average
selling prices for API products decreased only slightly because selling prices
for API products were largely determined by contracts entered into before the
fourth quarter. Domestic prices for our non-API products remained firm
because our sophisticated proprietary technologies make our products
attractive to customers.”

Fourth Quarter 2008 Results

WSP Holdings’ net revenue in the fourth quarter of 2008 was $299.3 million,
an increase of 130.4% from $129.9 million in the fourth quarter of 2007.
Sales volume was 195,718 tonnes in the fourth quarter of 2008, up 80.5% from
108,460 tonnes in the fourth quarter of 2007.

The increase in net revenue in the fourth quarter of 2008 was primarily
due to the strong growth in sales of API products and other products. During
the fourth quarter of 2008, domestic sales were $128.9 million and
international sales were $170.4 million, which contributed to 43.1% and 56.9%
of our total sales revenues, respectively.

Sales volume of API products was 138,751 tonnes in the fourth quarter of
2008, a 137.6% increase from 58,406 tonnes in the fourth quarter of 2007. API
product sales were $203.1 million in the fourth quarter of 2008, a 209.6%
increase from $65.6 million in the fourth quarter of 2007 primarily due to an
increase in sales of API products to customers in China during the fourth
quarter of 2008. Sales of other products were $36.2 million in the fourth
quarter of 2008, up 84.7% from $19.6 million in the fourth quarter of 2007
primarily due to strong demand for green pipes in the domestic market.

Non-API products are custom-made to customers’ specifications using more
stringent manufacturing standards than API products, and have higher average
selling prices than API products. Sales volume of non-API products was 28,433
tonnes in the fourth quarter of 2008, an increase of 16.7% from 24,368 tonnes
in the fourth quarter of 2007. Sales of non-API products were $60.0 million
in the fourth quarter of 2008, an increase of 34.4% from $44.7 million in the
fourth quarter of 2007. Non-API products accounted for 20.1% of the Company’s
net revenue in the fourth quarter of 2008, compared to 34.4% in the fourth
quarter of 2007. The decrease of non-API product sales in terms of percentage
to total sales was primarily due to the sudden increased demand of API
products from domestic markets.

Gross profit in the fourth quarter of 2008 was $56.0 million, an increase
of 68.5% from $33.2 million in the fourth quarter of 2007. Gross margin in
the fourth quarter of 2008 was 18.7%, compared to 25.6% in the fourth quarter
of 2007. Gross margin decreased mainly because of higher sales percentages of
API products and green pipes which have lower margins than non-API products.

Operating expenses in the fourth quarter of 2008 were $25.1 million, an
increase of 143.8% from $10.3 million in the fourth quarter of 2007.
Operating expenses increased because of higher general and administrative
expenses primarily related to the provisions for bad debt that resulted from
uncollectable letters of credit from a Russian bank which was unable to make
payment due to the bank’s financial difficulties, increased professional fees
as result of being a public company, and higher salary expenses due to the
hiring of additional employees. Marketing and selling expenses increased
because of increased sales commissions to sales representatives involved in
overseas sales. The increase in other operating income was primarily due to a
government subsidy to one of the Company’s principal operating subsidiaries,
Jiangsu Fanli Pipe Co., Ltd.

Income from operations in the fourth quarter of 2008 was $30.9 million, an
increase of 34.7% from $23.0 million in the fourth quarter of 2007. Operating
margin was 10.3% in the fourth quarter of 2008, compared to 17.7% in the
fourth quarter of 2007.

Net interest expense was $4.6 million in the fourth quarter of 2008,
compared to $2.8 million in the fourth quarter of 2007. Net interest expense
increased because of larger bank loans due to more working capital required
for the increased scale of operations, which was partially offset by lower
interest rates as well as interest income earned from the proceeds of the
Company’s initial public offering. There was an income tax benefit of $3.9
million
in the fourth quarter of 2008, compared to income tax expenses of $1.2
million
in the fourth quarter of 2008. The tax benefit was recognized because
WSP China was granted “High and New Technology Enterprise” status by the
Chinese government in the fourth quarter of 2008, which reduced WSP China’s
income tax rate from 25% to 15%, effective retroactively as of January 1, 2008.
Accordingly, provisions for income taxes accrued in excess of 15% up to the
end of third quarter of 2008 of $9.1 million were reversed in the fourth
quarter of 2008, resulting in a net tax credit of $3.9 million.

Net income was $27.8 million in the fourth quarter of 2008, an increase of
65.9% from $16.7 million in the fourth quarter of 2007.

Basic and diluted earnings per ADS were both $0.27 for the fourth quarter
of 2008, compared to $0.20 for both in the fourth quarter of 2007.

There were 205,789,800 fully diluted weighted average ordinary shares
outstanding in the fourth quarter of 2008, compared to 164,836,391 in the
fourth quarter of 2007.

Full Year 2008 Financial Results

For the full year 2008, net revenue was $912.1 million, up 88.5% from
$483.8 million in 2007. Revenues from non-API products grew 93.5% from $152.4
million
in 2007 to $294.8 million in 2008, and revenues from API products
increased 75.1% from $288.6 million in 2007 to $505.3 million in 2008.
Revenues from other products increased 161.4% from $42.8 million in 2007 to
$112.0 million in 2008.

Gross profit for the full year 2008 was $208.6 million, an increase of
65.8% from $125.8 million in 2007. Gross margin was 22.9% in 2008, compared
to 26.0% in 2007. Income from operations for 2008 was $146.6 million, up
41.6% from $103.6 million in 2007. Operating margin was 16.1% in 2008,
compared to 21.4% in 2007. Net income for the full year 2008 was $99.3
million
, an increase of 33.2% from $74.6 million in 2007. Basic and diluted
earnings per ADS were both $0.97 in 2008, compared to $0.97 for both in 2007.

Financial Condition

As of December 31, 2008, the Company had cash and cash equivalents and
bank balances of $89.1 million from $180.1 million as of December 31, 2007.
Restricted cash totaled $232.0 million as of December 31, 2008, compared to
$120.8 million as of December 31, 2007. Inventory and accounts receivable
increased proportionately with increased overall production.

Working capital was $123.2 million as of December 31, 2008, compared to
$203.0 million as of December 31, 2007. Total shareholders’ equity was $482.6
million
as of December 31, 2008, up from $341.1 million as of December 31,
2007
.

Recent Developments

In February, 2009, the Company won a contract with CNPC in a bidding
process to supply an aggregate of 90,202 tonnes of OCTG to CNPC. In addition,
WSP Holdings received direct purchase orders for a total of 52,575 tonnes of
OCTG from CNPC, SINOPEC and Shaanxi Yanchang Petroleum (Group) Co., Ltd.

In February 2009, WSP Holdings’ wholly-owned subsidiary Songyuan Seamless
Oil Pipes Company Limited completed the construction of a new facility with a
pipe finishing capacity of 60,000 tonnes per annum and began its trail
production.

Liaoyang Seamless Oil Pipes Company Limited, a 70%-owned subsidiary, began
trial production on a recently completed production line with pipe finishing
capacity of 60,000 tonnes per annum

WSP Holdings’ wholly-owned major operating subsidiary Wuxi Seamless Oil
Pipes Company Limited expanded its production capacity by introducing two new
threading lines, with annual production capacity of 60,000 tonnes and 100,000
tonnes, respectively.

Business Outlook

For the full calendar and fiscal year 2009, WSP Holdings expects to
generate net revenue between $650 million and $750 million and net income in
the range of $70 million to $80 million.

“In 2009, we expect selling prices in China for our non-API products to
remain at current levels for some time because our products are needed in
extreme oil and gas exploration environments and our customers recognize the
technological advantages of our products, such as our T-series premium
connection and anti-corrosion pipes which use our proprietary technologies.
Our non-API products have price advantages compared to our international
competitors because of our lower costs of production, and we provide faster
delivery to our international customers than most of our international
competitors to attract more international customers. It is difficult to
predict how selling prices for our API products in China will change during
the remainder of 2009 because of a current oversupply of API products and
aggressive price competition in the Chinese market. Based on the purchase
contracts we won in February 2009, we estimate that average selling prices to
our largest domestic customers will be lower and order volume will remain
constant throughout 2009,” commented Mr. Piao. “Looking forward, we cannot
predict what will happen to raw material prices in 2009, which will have an
important impact on our API and non-API sales margins.”

“We welcome the economic stimulus package announced by the Chinese
government which aims to increase spending on domestic civil and industrial
infrastructure projects, particularly the West-to-East Gas Pipeline Project,
which will encourage the domestic energy sector to grow and increase the
demand for OCTG. We will also continue to expand our OCTG business to other
regions, including Africa, the Middle East, Central and South America and
Southeast Asia, to minimize the impact of declining sales in North America.”

“We have begun construction of new facilities in the Xinjiang Autonomous
Region, which will allow us to lower manufacturing and transportation costs,
take advantage of low regional labor costs in the region, and be in closer
proximity to raw material sources and our customers’ oilfields in central and
western China. We are developing these facilities to address Chinese domestic
demand for API and non-API products,” concluded Mr. Piao.

Conference Call

WSP Holdings’ management will host a conference call at 9:00 a.m. Eastern
Daylight Time
on Wednesday, March 11, 2009 to discuss results for its fiscal
quarter and year ended December 31, 2008. To participate in this live
conference call, please dial the following number five to ten minutes prior to
the scheduled conference call time: 800-659-2032. International callers should
call 617-614-2712. The Conference Pass Code is 854 384 09.

Replay of the conference call will be available from 11:00 a.m. Eastern
Daylight Time
on Wednesday, March 11, 2009 to Wednesday, March 18, 2009. To
access the replay, call 888-286-8010. International callers should call
617-801-6888. The Conference Pass Code is 634 469 56.

This conference call will also be broadcast live over the Internet and can
be accessed by all interested parties on WSP Holdings’ website:
http://www.wsphl.com/ . To listen to the live webcast, please go to WSP
Holdings’ website at least fifteen minutes prior to the start of the call to
register, download and install any necessary audio software. For those unable
to participate during the live broadcast, a replay will be available shortly
after the call on WSP Holdings’ website for 90 days.

About WSP Holdings Limited

WSP Holdings develops and manufactures seamless Oil Country Tubular Goods
(OCTG), including seamless casing, tubing and drill pipes used for on-shore
and off-shore oil and gas exploration, drilling and extraction, and other
pipes and connectors. Founded as WSP China in 1999, the Company offers a wide
range of API and non-API seamless OCTG products, including products that are
used in extreme drilling and extraction conditions. The Company’s products
are used in China’s major oilfields and are exported to oil producing regions
throughout the world. For further information, please visit WSP Holdings’
website at http://www.wsphl.com/ .

Safe Harbor Statements

Safe Harbor Statement Under the Private Securities Litigation Reform Act
of 1995: Any statements set forth above that are not historical facts are
forward-looking statements that involve risks and uncertainties that could
cause actual results to differ materially from those in the forward-looking
statements. Among other things, the Company’s outlook for 2009 and quotations
from management in this announcement contain forward-looking statements. A
number of factors could cause actual results to differ materially from those
contained in the forward-looking statement. Such factors include, but are not
limited to, the Company’s ability to develop and market new products, the
ability to access capital for expansion, changes from anticipated levels of
sales, changes in national or regional economic and competitive conditions,
changes in relationships with customers, changes in principal product profits
and other factors detailed from time to time in the Company’s filings with the
United States Securities and Exchange Commission and other regulatory
authorities. The Company undertakes no obligation to update or revise to the
public any forward-looking statements, whether as a result of new information,
future events or otherwise. This press release was developed by WSP Holdings,
and is intended solely for informational purposes and is not to be construed
as an offer or solicitation of an offer to buy or sell the Company’s stock.
This press release is based upon information available to the public, as well
as other information from sources which management believes to be reliable,
but it is not guaranteed by WSP Holdings to be accurate, nor does WSP Holdings
purport it to be complete. Opinions expressed herein are those of management
as of the date of publication and are subject to change without notice.

    Financial Tables Follow

                               WSP HOLDINGS LIMITED
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             (In thousands, except for share and share-related data)

                              3 Months     3 Months    12 Months   12 Months
                                Ended        Ended       Ended       Ended
                               December     December    December    December
                                  31,          31,         31,         31,
                                 2008         2007        2008        2007

    Net revenues               $299,307     $129,882    $912,090    $483,783
    Cost of revenues           (243,294)     (96,640)   (703,531)   (357,997)
    Gross profit                 56,013       33,242     208,559     125,786

    Selling and marketing
     expenses                    (6,682)      (4,273)    (22,770)     (8,578)
    General and
     administrative expenses    (20,462)      (5,855)    (41,740)    (13,591)
    Other operating income
     (expenses)                   2,060         (160)      2,589         (32)
    Income from operations       30,929       22,954     146,638     103,585

    Interest income               1,247          952       7,694       2,074
    Interest expenses            (5,810)      (3,737)    (23,013)    (12,615)
    Other income                    192           58         767         212
    Exchange differences         (1,737)      (1,593)     (6,984)     (1,898)
    Income before provision
     for income taxes and
     minority interests          24,821       18,634     125,102      91,358

    Provision for income
     taxes                        3,909       (1,167)    (24,405)    (15,188)

    Net income before
     minority interests          28,730       17,467     100,697      76,170
    Earnings in equity
     investment                       1           --           1          --
    Minority interests             (972)        (735)     (1,349)     (1,609)
    Net income                  $27,759      $16,732     $99,349     $74,561
    Weighted average
     ordinary shares
     used in computation
     of earnings per share
        Basic               205,789,800  164,130,435 205,663,247 153,561,644
        Diluted             205,789,800  164,836,391 205,663,247 153,738,133

    Earnings Per Ordinary
     Share
        Basic                     $0.13        $0.10       $0.48       $0.49
        Diluted                   $0.13        $0.10       $0.48       $0.48

    Earnings Per ADS
        Basic                     $0.27        $0.20       $0.97       $0.97
        Diluted                   $0.27        $0.20       $0.97       $0.97

        Note:  Each ADS represents two ordinary shares

                               WSP HOLDINGS LIMITED
                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (In thousands)

                                                   December 31,   December 31,
                                                       2008           2007

    Assets
    Cash and cash equivalents and bank balances       $89,097       $180,130
    Restricted cash                                   231,988        120,759
    Accounts and bills receivable, net                246,463        137,497
    Other current assets                              351,828        187,656
    Total Current Assets                              919,376        626,042

    Property and equipment, net                       307,227        185,136
    Land use rights                                    38,814          9,553
    Other non-current assets                           45,194          6,490
    Total Assets                                    1,310,611        827,221

    Current liabilities                               796,135        423,032
    Other liabilities                                  12,481         59,063
    Total Liabilities                                 808,616        482,095

    Minority interests                                 19,389          4,002
    Total shareholders' equity                        482,606        341,124
    Total Liabilities, Minority Interests and
     Shareholders' Equity                          $1,310,611       $827,221

    For more information, please contact:

    WSP Holdings Limited
     Ms. Judy Zhu, IR Director
     Tel:   +86-510-8536-0401
     Email: info@wsphl.com
     Web:   http://www.wsphl.com

    CCG Investor Relations, Inc.
     Mr. Crocker Coulson, President
     Tel:   +1-646-213-1915 (New York)
     Email: crocker.coulson@ccgir.com
     Web:   http://www.ccgirasia.com

SOURCE WSP Holdings Limited


Source: newswire