China Recycling Energy sales, profit sharply declined
Total sales, including system sales and contingent rental income, for the three months ended September 30, 2012 was $0.48 million while total sales for the comparable period of 2011 was $18.84 million, a decrease of $18.37 million as a result of decrease in sales of systems.
Of the total sales, sales of systems for the three months ended September 30, 2012 was $0, as compared to $18.58 million for the comparable period of 2011, a decrease of $18.58 million.
Gross profit was $0.44 million for the three months ended September 30, 2012 compared to $4.52 million for the comparable period of 2011. This decrease was mainly due to a combined gross margin for sales of systems and rental income of 93% and 24% for the comparable period of 2012 and 2011, respectively.
Interest income on sales-type leases for the three months ended September 30, 2012 was $4.59 million, a $0.88 million decrease from $5.47 million for the comparable period of 2011.
"As expected, we do not have project completion during the third quarter, hence we do not realize system sales for this quarter. Interest income from our sales-type lease is our other major revenue. During this quarter, we generate stable income and cash flow from our 11 systems. As most of our projects are recognized as sales-type lease, we experience non-linear revenue flows in our financial statement due to the special revenue recognition method for sales-type lease," said Guohua Ku, Chairman and chief executive officer. ■