Orient Paper Inc (ONP) swung to a net profit for the quarter ended Mar. 31, 2017. The company has made a net profit of $1.71 million, or $ 0.08 a share in the quarter, against a net loss of $1.37 million, or $0.06 a share in the last year period. Revenue during the quarter dropped 9.40 percent to $25.29 million from $27.91 million in the previous year period. Gross margin for the quarter expanded 887 basis points over the previous year period to 22.36 percent. Operating margin for the quarter period stood at positive 11.35 percent as compared to a negative 2.08 percent for the previous year period.
Operating income for the quarter was $2.87 million, compared with an operating loss of $0.58 million in the previous year period.
“Our revenue decreased by 9.4% in the first quarter mainly as a result of a government mandated temporary restriction on production that has been in place since November 2016 that adversely affected our production and sales volume for light-weight corrugating medium paper (“CMP”), offset printing paper and tissue paper. However, margins and profitability improved significantly in the first quarter thanks to continued uptick in average selling price for regular CMP as well as decrease in operating expenses,” said Zhenyong Liu, chairman and chief executive officer of Orient Paper. “While we continue to face the uncertainties of government mandated production restriction/suspension from time to time, we expect the overall price environment to remain relatively stable for the remainder of the year.”
Operating cash flow turns positive
Orient Paper Inc has generated cash of $1.36 million from operating activities during the quarter as against cash outgo of $0.49 million in the last year period. The company has spent $5.26 million cash to meet investing activities during the quarter as against cash outgo of $0.43 million in the last year period.
Cash flow from financing activities was $6.19 million for the quarter, up 227.92 percent or $4.30 million, when compared with the last year period.
Cash and cash equivalents stood at $4.65 million as on Mar. 31, 2017, up 27.29 percent or $1 million from $3.65 million on Mar. 31, 2016.
Working capital remains negative
Working capital of Orient Paper Inc was negative $6.44 million on Mar. 31, 2017 compared with negative $10.54 million on Mar. 31, 2016. Current ratio was at 0.80 as on Mar. 31, 2017, up from 0.71 on Mar. 31, 2016.
Cash conversion cycle (CCC) has decreased to 26 days for the quarter from 43 days for the last year period. Days sales outstanding were almost stable at 9 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 18 days for the quarter compared with 36 days for the previous year period. At the same time, days payable outstanding was almost stable at 2 days for the quarter, when compared with the previous year period.
Debt moves up
Orient Paper Inc has witnessed an increase in total debt over the last one year. It stood at $34.37 million as on Mar. 31, 2017, up 5.47 percent or $1.78 million from $32.59 million on Mar. 31, 2016. Total debt was 15.42 percent of total assets as on Mar. 31, 2017, compared with 13.79 percent on Mar. 31, 2016. Debt to equity ratio was at 0.20 as on Mar. 31, 2017, up from 0.18 as on Mar. 31, 2016.
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