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China Gerui Advanced Materials - CHOP - Record year in terms of revenues and profits

4/17/2012 12:24:27 PM

China Gerui Advanced Materials Group Limited (NASDAQ: CHOP), a leading high precision, cold-rolled strip steel producer in China, announced unaudited financial results for the fourth quarter and fiscal year ended December 31, 2011.

CHOP Full Year 2011 Highlights (Unaudited)

Revenue increased 34.6% to $341.8 million

Gross profit increased 33.7% to $101.6 million

Gross margin was 29.7%

Operating income increased 24.8% to $83.5 million

Net income increased 22.4% to $57.6 million, or $1.02 per diluted share

Unrestricted cash increased 106.4% to $246.6 million

Operating cash flow increased 54.2% to $56.2 million

Working capital increased 113.6% to $142.5 million

CHOP Fourth Quarter 2011 Highlights (Unaudited)

Revenue increased 39.0% to $91.9 million

Gross profit increased 42.5% to $28.0 million

Gross margin was 30.4%

Operating income increased 42.1% to $24.0 million

Net income was $18.2 million, or $0.31 per diluted

"We are very pleased to report a record year in terms of revenues and profits as our expanded cold-rolled steel production capacity drove record levels of sales volume in 2011. Our specialized steel precision product offerings were further enhanced with the year's increase in chromium plating capability to 250,000 tons per year which is applicable to both our wide- and narrow-strip steel products," said Mr. Mingwang Lu, Chairman and Chief Executive Officer. "The construction and equipment installation of 100,000 tons of annual cold-rolled steel capacity has been completed as of the first quarter of 2012 and is undergoing testing and fine-tuning of its production processes. This added capacity now aggregates to a total of 500,000 metric tons of both wide- and narrow-strip cold-rolled steel production per year."

"We believe that the new capacity will enable us to better service our existing customers as well as to secure new business as we are better positioned than ever to offer one-stop shopping in the specialized high-end cold-rolled steel sector. Our objective in 2012 is to continue building upon our strong capabilities so as to further penetrate our specialized steel sector and build market share. Our in-house production processes have contributed to China Gerui's excellent reputation as a high-quality steel producer in China as we continue to experience strong demand for our end-use products across a variety of industries," Mr. Lu continued. "Although our fourth quarter results were lower than we expected primarily due to macroeconomic issues, following the ramp-up of our new production lines, we believe that our cost-plus pricing strategy and business model of specialized customization of our products will continue to contribute towards positive results in the years ahead."

About China Gerui Advanced Materials Group Limited (CHOP)

China Gerui Advanced Materials Group Limited (CHOP) is a leading niche and high value-added steel processing company in China. The Company produces high-end, high-precision, ultra-thin, high- strength, cold-rolled steel products that are characterized by stringent performance and specification requirements that mandate a high degree of manufacturing and engineering expertise. China Gerui's products are not standardized commodity products. Instead, they are tailored to customers' requirements and subsequently incorporated into products manufactured for various applications. The Company sells its products to domestic Chinese customers in a diverse range of industries, including the food packaging, telecommunication, electrical appliance, and construction materials industries.

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