Helen Xu
Okay. Thank you, operator. Good morning, ladies and gentlemen, and good evening to all those of you for joining us from China. And we'd like to welcome all of you to Gulf Resources Fourth Quarter and Full Year 2021 Earnings Conference Call.
I'm Helen Xu, the IR Director. And our CEO of the company, Mr. Xiaobin Liu, also joining us for this call today.
I'd like to remind you to all of our listeners that in this call certain management statements during the call will contain forward-looking information about Gulf Resources Incorporation and its subsidiary business and products with the meaning of [ the rules described ] under Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. Actual results may differ from those discussed today taking into account a number of risk factors included but not limited to the general economic and business conditions in China.
The risks associated with the COVID pandemic outbreak, future product development and production capabilities, shipments to end customers, market acceptance of new and existing products, additional competition from existing and new competition from the bromine and other chemicals products, changing technology, the ability to make future bromine assets and the various other factors beyond the company's control.
All forward-looking statements are expressly qualified in their entirety by these cautionary statements, and the risk factors detailed with the company's reports filed with the SEC. Gulf Resources assumes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Accordingly, our company believes that the expectations reflecting results forward-looking statements are reasonable, and there can be no assurance of such will prove to be correct. In addition, any reference to the company's future performance represents the management's estimates as of today, the 30th of April 2022.
For those of you unable to listen to the entire call at this time, a replay will be available at the company's website. The call is also accessible through the webcast, and the link is accessible through our webcast. So please locate our press release issued earlier for the details.
So first of all, I'd like to start by reviewing the fiscal year and fourth quarter 2021, and then product updating investors on each of our segments.
For that 2021 fiscal year, the revenues exceeded approximately $5 million, an increase of 95% compared to the previous fiscal year. The gross profit was approximately $21.9 million, an increase of 217% from the previous year. Gross margins were 50.7% versus 31.2%. Profit before taxes improved approximately $14.9 million to $5.2 million from a loss of approximately $9.7 million. Taxes were approximately $6.3 million, 117% of profits, reflecting the cancellation of deferred tax assets. The loss after taxes declined 89% to $924,718.
Three factors contributed to the net loss. Firstly, the depreciation expenses of approximately $4.3 million for closed factories #2, #8, and #10. First reason, there are approximately $2.7 million for the cancellation of deferred tax assets. And the third reason, approximately $3.1 million in compensation charges for the shares being issued to the company's management, consultants and staff.
So now let's review the operating results by segment. Firstly, let's look at the bromine segment. The revenues in bromine increased by 78% to approximately $48.8 million, the increase was due to an increase in volume of 24%, and an increase in pricing of 57%. For the year 2021, the average selling price of bromine was RMB 42,644. The current price is RMB 55,600.
Gross profit increased by 182% to approximately $26 million. Gross profit margins were 53% compared to 37%. Net income in bromine increased by 727% to approximately $13.4 million. For crude salt segment, the revenues in crude salt increased by 101% to approximately $6.1 million. For the fiscal year, the crude salt segment lost approximately $1.1 million compared to a loss of $3.6 million in the previous year.
Lastly, let's look at the chemicals and natural gas segments. The chemical products segment sustained a loss of approximately $2.5 million, roughly in line with the loss in the previous year. The chemicals business did not operate in year 2021. The natural gas segment sustained a loss of approximately $167,000, and natural gas segment also did not operate in year 2021.
Now let's review our fourth quarter 2021 results. In the fourth quarter 2021, revenues increased 76.7% to approximately $20.9 million. Gross margin increased 156.2%. Margins were 62.4% compared to 43.1% in the previous year, reflecting the higher prices for both bromine and crude salt. Income from operations increased 350%. Tax increased 718.1%. The company incurred a loss of approximately $1.1 million versus a profit in the previous year.
A number of unique accounting sectors impacted the fourth quarter results. Firstly, the depreciation in the fourth quarter was approximately $4.5 million higher than the previous year, primarily because we took all the depreciation for the 3 factories closed in 1 quarter, as we mentioned earlier. Secondly, the tax rate was 129% of profit instead of the traditional 25% because we canceled some deferred tax assets.
Third reason. Excluding this onetime event, we would have shown a profit in the fourth quarter and in the year as a whole.
Now let's look at cash flow. For the year, the company generated $23.3 million cash from operations compared to $9.3 million in the previous year. Capital expenditures were $30.1 million compared to $21.7 million in the previous year, approximately $20.3 million were spent upgrading wells, aqueducts and other resources for the chemical and crude salt segments, with expenditures -- and there are approximately $8.4 million were spent on equipment for the new chemical factory.
Now let's look at the balance sheet. The company ended the year with cash of approximately $95.8 million. On a per share basis, using 10,471,924 shares issued and outstanding ended by -- as December 31, 2021. This equals to $9.15. The net cash per share was $7.82. Working capital per share was $9.70. Shareholders' equity was $27.37.
Now let's review our business by segment. Firstly, let's look at bromine and crude salt segments. The pricing of bromine -- our bromine prices have declined from the record high when all factories were closed. They remained substantially higher than last year. According to SunSirs.com, bromine prices per tonne were RMB 36,222 on April 5, 2021, and RMB 55,600 on April 5, year 2022. We expect higher prices to continue for a number of reasons. First, the bromine factories have been permanently shut down. Secondly, because of the winter shutdown and the new COVID restrictions, some of our customers have not yet resumed production. Third, demand for bromine products such as pharmaceuticals and their byproducts is increasing. Fourth, rest of factors that could potentially lead to an even more significant price increase in the use of zinc and bromine batteries. The combination of zinc and bromine is now being used in hybrid batteries that appear to offer significant applications for EVs and power storage.
The company does not know how important this application could be. But according to a study, the market data for [ cost.com ] published on April 7 is the type of the market for zinc and bromine batteries is projected to grow from $8.6 billion in the year 2021 to $20.6 billion in year 2027. We are not making any projections, but we see the adoption of these batteries could have a significant positive impact on the price of bromine.
Factories #2, #8, and #10, the government is continuing its environmental planning to protect the pollution by -- the population against the pollution and the impact of [ the loss ] . However, recent contacts make us increasingly optimistic that the company will receive approval to open 1 or more of its factories in year 2022.
We would like to be required to invest in new wells and aqueducts. The total cost of this rectification will depend on the requirements of the government, which cannot be estimated until the government gives us specific instruction. However, in the current price of bromine, expect this factory to be strong contributors to profit.
Chemical factory segment. Following the electricity restrictions are being eased in established year 2022 regarding its Yuxin chemical factory. At that time, the company requested the production and delivery of most of the equipment in an expedited manner. We are not starting when all the equipment will be delivered as some of our vendors are still closed because of renewal of COVID restrictions in China.
However, we do believe that all equipment should be delivered and installed by the third quarter of 2022. The delays caused by the electricity issues may increase the total cost of the chemical factories by approximately $5 million. As we have previously noted, once the equipment is installed, we will begin test and then trial production. This process should take about approximately 6 months. Assuming this could be another winter closure, we expect commercial production to begin in year 2023.
The economy has seen strong demand for the types of pharmaceuticals intermediary products and the byproducts this chemical factory will produce. Pricing remains extremely strong. The company believes this factory will generate sales and profit by year 2024. The company will be active in posting photographs of the factory, so the investors can follow our progress.
Lastly, let's look at our Sichuan natural gas and brine projects. The company is still waiting for the provincial government of Sichuan to finalize its land and resource planning for Sichuan Province. We hope investors can understand that this planning is not only for the -- it's for the entire province, which is about 84 million people, not just for our project. As a result, we cannot project when the province will complete its work. However, we do remain optimistic about the long-term potential. Investors have asked why we remain optimistic about this project. There are 2 reasons.
Firstly, the central government has approved that privately owned enterprises are allowed to participate in the natural gas production. Given this approval, it does not seem the application will be denied. Secondly, while we have been waiting for the province to complete its plan, the fundamentals underlying this project have [ surged ] significantly. Natural gas prices continued to rise and China has faced shortage of energy, especially clean energy. Bromine prices, as we have discussed also, continued to rise. The company would like to remind investors that the bromine concentrations in Sichuan are extraordinarily high.
Balance sheet and cash. Investors have also asked, why we do not put our substantial cash balance in long-term financing instruments. That could provide us with additional income. The answer is that we have no exact handle on the timing of decisions by the government or opportunities on which we could capitalize. We are now moving ahead to complete construction of our chemical factory. We believe we will receive approval to open 1 or more of our closed bromine factories in year 2022. The opening of these factories will require some capital expenditures as well if and when we receive approval in Sichuan Province. We want to be very aggressive in [ treating ] for both natural gas and brine resources, not just in our existing location well, but in other locations that we have identified. We also consider acquisitions.
Guidance. We will provide guidance for the full year when we report our first quarter in about 1 month. Because of the winter closures and the impact of the cold on crude salt production, the first quarter year 2022 is -- mainly in the first quarter is the weakest quarter of the year. In the first quarter of year 2022, the company expects first quarter revenues to be higher than those of the previous years. It also expects the loss to be very significantly reduced. However, any estimates exclude any potential nonrecurring factors or write-offs.
Now let me turn the call to -- over to Mr. Liu.
