ZHEJIANG, China, April 2, 2012 /PRNewswire via COMTEX/ -- Lizhan Environmental Corporation ("Lizhan" or the "Company") /quotes/zigman/1376030/quotes/nls/lzen LZEN 0.00% , one of China's leading manufacturers of eco-friendly fabrics made from patented technologies, announced today its three- and twelve-month unaudited results for the fiscal year ended September 30, 2011.

The Company produced and sold approximately 12 million meters of fabric in the twelve months ended September 30, 2011, down 2 million meters from 14 million meters in the corresponding period in 2010. Domestic sales fell by approximately 33% and sales to international customers increased by 16%.

"We faced several challenges in the past year, which we are actively working to address," explained Chairman and Chief Executive Officer Jiangfeng Liu. "The most encouraging development has been an improvement in our Colgre Products daily production from 1,000 meters per day in the fourth quarter of 2011 to 3,000 meters per day currently. Demand is building gradually and we are in active discussions with new customers in China and overseas."

Mr. Liu continued, "We do not expect to experience the production disruptions caused by the lack of steam supply that occurred from January to March of year 2011. We are also working on diversifying our raw materials suppliers, which should help improve our production stability and enhance our profitability."

Three months Ended September 30, 2011 Financial Results (Unaudited)

Net Sales

Net Sales for the three months ended September 30, 2011 were $8.5 million, a 27% decline from $11.7 million in the same period of fiscal 2010. Sales of recycled leather flocked fabrics decreased 35% to $6.4 million due to lower orders from domestic and international customers. The Company sold $1.2 million of ultra suede leather products, up 35% from the same period last year.

Lizhan continued to increase production of its Colgre Products - previously known as Evergreen Products - in the fourth quarter of 2011, with approximately 25,000 meters produced. The Company shipped and sold approximately 15,000 meters of Colgre Products during the fourth quarter of year 2011, resulting in sales of approximately $0.2 million.

Gross Profit

Gross profit was $1.2 million compared to $2.7 million for the same quarter in 2010. The 56% decline was a result of rising raw materials and labor costs. Gross margins were 14% and 23% in the three months ended September 30, 2011 and 2010, respectively.

Operating Expenses

Operating expenses increased from $1.0 million to $1.7 million, representing approximately 20% of revenues. The increase was primarily due to higher salaries and expenses related to the addition of Colgre Products.

Net Income

Lizhan generated a $0.3 million loss attributable to common shareholders compared to a $1.8 million net income in the three months ended September 30, 2010 due mainly to lower sales and higher expenses. Net loss was $0.02 per share based on 13.6 million weighted average shares outstanding in the fourth quarter of 2011 compared to $0.17 net income and 11.1 million shares in the same period last year, respectively.

Twelve months Ended September 30, 2011 Financial Results (Unaudited)

Web link: http://www.marketwatch.com/story/lizhan-environmental-corporation-reports-fiscal-year-2011-unaudited