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China Runji Cement Inc. Reports Third Quarter and Nine Month Results

July 15, 2008

 
 

ANHUI, China, July 15, 2008-- China Runji Cement Inc. (OTCBB:CRJI) ("Runji" or "the Company"), a leading cement manufacturing and distribution company headquartered in Anhui Province, People's Republic of China ("PRC"), today announced its results for the third quarter and nine months ended May 31, 2008.

2008 Key Financial Highlights

* Revenues for the three months ended May 31, 2008 were $11.68 million, up 101% from the same period last year. For the nine months ended May 31, 2008, revenues were $27.9 million, up 39% from $20.1 million for the same period last year.
* Gross profit for the three months ended May 31, 2008 was $2.86 million, up 874% from $0.29 million for the same period last year.
Gross profit for the nine months ended May 31, 2008 was $6.3 million, up 214% from $2 million for the same period in 2007.
* For the three months ended May 31, 2008 gross margin increased to 24.5% from 4.9% for the same period last year. Gross margin for the
nine months ended May 31, 2008 was 22.6%, compared with 9.9% of the same period last year.
* Net income for the three months ended May 31, 2008 was $2.69 million, or $0.03 per fully diluted share, compared with net loss of $(2,449) in the same period last year. Net income for the nine months ended May 31, 2008 increased 1811% to $4.97 million, or $0.07 per fully diluted share, from $0.26 million, or $0.00 per fully diluted share, of the same period in 2007.

"We are glad to achieve a substantial increase in revenue and net income. In particular we are excited to see a significantly higher margin in the third quarter," said Mr. Shouren Zhao, Chairman & CEO of China Runji Cement Inc. "Over the past quarter, we have overcome the negative effects imposed from overwhelming weather conditions in the second quarter and are back to normal production capacities. In light of the strong market demand and sales price hike in cement industry, we are confident to maintain an expanding margin in the coming quarter. Furthermore, our second cement clinker production line will come online in October, which will substantially increase our production capacity and generate more revenue. We are committed to maintain the best production status to capture the strong market demand."

Third Quarter Fiscal Year 2008 Results

Revenues for the three months ended May 31, 2008 increased by $5,872,213 or 101% to $11,681,719 from $5,809,506 for the same corresponding period in 2007. The increase is primarily attributed to increased sales volume, especially PO42.5 cement, and also due to retail price hike for cement products.

Of the $11,681,719 in revenue for the three months ended May 31, 2008, approximately $8,435,168 (or 72%) was generated from sales of PO42.5 cement, and $453,022 (or 4%) from the premium grade cement PII52.5.

Our gross profit increased by $2,568,446 or approximately 874% to $2,862,188 for the three months ended May 31, 2008 from $293,742 for the same period in 2007. The increase primarily resulted from the increase in the retail price of cement products in China. This increase counter balanced the negative effect imposed by the increase in raw material costs. We are able to transfer the costs of raw materials to our customers by increasing the retail price of cement.

Net income for the third quarter of 2008 was $2.69 million, or $0.03 per fully diluted share, up from net loss of ($2,449), or $0.00 per fully diluted share, in the third quarter of 2007. Net margin for the period grew to 23% from 0.0% in third quarter 2007.

Financial Condition

For the nine months ended May 31, 2008, the Company had $2.2 million in cash and cash equivalents, ($4.6) million in working capital and a current ratio of 0.62. Runji had $0.4 million in short-term loans payable and $19.6 million in shareholders' equity. The Company's cash flows from operations in the nine months of financial year 2008 were $9.3 million. To date, Runji has funded most of its cash needs with loans from related parties, which totaled $28.4 million as of May 31, 2008.

Business Outlook

As the cement demand and market price are growing quickly in China, Runji's operation has experienced high growth in the third quarter. Furthermore, Anhui's annual growth rate of 11%, which is above the national average, has translated into an abundance of construction projects, particularly large-scale government sponsored infrastructure projects which is demanding in cement quality.

"Our current cement clinker output is 2,500 tons per day and our production facilities are operating in full capacity," said Mr. Zhao. "Our second cement production line with same capacity is expected for trial production next month and will be put in full production in October. Furthermore, we are also building a waste heat power generator which will come online in 2009, which will generate electricity of around 63 million KW annually and further reduce our operating costs and increasing margins."

Current Capacity

* Currently have one cement clinker production line with designed
capacity of 2,500 tons per day or 775,000 tons per year.
* Has been producing at around 120% capacity in the past two years to
meet with the high cement demand.
* The second production line with 2,500 tons daily output will come
online in October 2008. Cement clinker designed capacity of the
Company will be doubled to 1.5 million ton per year upon
completion.
About China Runji Cement, Inc.

Founded in 2003, China Runji Cement, Inc. is one of the leading players in cement production and distribution. In October 2007, the Company became a U.S. public company following the completion of a share exchange with Fitmedia Inc. The Company's certified manufacturing facilities contain cutting-edge technology and advanced equipment and are capable of producing as much as 1 million tons of cement annually. Furthermore, the Company's solid distribution network and customer-oriented services have earned Runji's products a superior reputation among its customers. Headquartered in Anhui Province, the Company's markets include major local cities such as Hefei, Nanjing, and Liu'an.

For more information on the Company and its products, please visit http://www.chinarunji.com/index.asp.

Safe Harbor Statement

This press release contains certain statements that may include 'forward-looking statements' as defined in the Securities Act of 1933, and the Securities Exchange Act of 1934. All statements, other than statements of historical facts included herein are 'forward-looking statements'. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release.

The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.