Delong Holdings, the manufacturer of hot-rolled steel coils (HRC) in China, says it posted a net profit after tax of RMB 248.4 million and RMB 416.9 million ($86 million) for the fourth quarter (4Q2009) and full year (FY2009) respectively, reversing net losses of RMB 637 million and RMB 370.4 million recorded in 4Q2008 and FY2008 respectively.

Supported by improving economic conditions, FY2009 witnessed more stable product prices and less volatile business performance sequentially, compared to FY2008. For the full year, group revenue declined 30.6% year-on-year to RMB 7.7 billion, principally as a result of lower sales volume and average selling prices. Revenue for 4Q2009 was up 43.2% from the corresponding period a year ago to RMB 2.1 billion, providing a lift to Delong’s full-year results. The group sold 2.5 million tonnes of HRC in FY2009.

Delong says effective cost containment measures, backed by higher product average selling prices, helped the group widen its gross profit to RMB 236.7 million in 4Q2009, compared to a gross loss of RMB 507.7 million in 4Q2008. The group posted a full year gross profit of RMB 701.5 million, up 436.9% from RMB 130.7 million in FY2008, boosted in particular by stronger performance in the second half of FY2009.

In early 2009, uncertainty surrounding the recovery of the global economy had prompted Delong to reassess its ability to fulfill its obligations under convertible bonds issued in 2007. In a move to proactively manage its debt obligations, the group proposed to amend the terms and conditions of the old convertible bonds. The completion of the bonds restructuring exercise in December 2009 provided the group with a financially viable route to fulfill its bonds obligations under an alternative settlement scheme.

As at 31 December 2009, the group held RMB 6.3 billion in total assets on its balance sheet, of which RMB 3.3 billion were in property, plant and equipment (PPE). This is a small increase over RMB 6.1 billion recorded as at 31 December 2008, largely attributable to increased inventories of raw material stock, offset by depreciation in PPE and decrease in cash from RMB 676.4 million to RMB 290.1 million under the bonds restructuring exercise.

As at the end of the financial year, the group also recorded RMB 4.3 billion in total liabilities, compared to RMB 4.7 billion as at 31 December 2008. Mainly due to the successful restructuring of the old convertible bonds, the group reduced its debt obligations significantly from RMB 2.8 billion to RMB 2.3 billion in both long- and short-term borrowings. Consequently, debt-to-equity ratio improved from 206.0% to 114.8% over the one year.

Net asset value per share stood at RMB 3.80 as at 31 December 2009, an increase of 50.8% over 31 December 2008.