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TORONTO, Nov. 10, 2011 /CNW/ - Asia Bio-Chem Group Corp. (TSX: ABC) ("Asia Bio-Chem" or the "Company") today announced its interim financial statements for the period ending September 30, 2011.
Interim Financial Results
Highlights
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Strong by-products prices, higher starch prices and higher sales volumes
contributed to a 38.5% improvement in revenues during the third quarter
of 2011 to $69.1 million compared with the same period in 2010.
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Record high corn costs have caused gross margin to decline to 2.5%
during the third quarter compared with 12.0% during the same period in
2010.
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Lower gross margin together with higher operating expenses during the
third quarter resulted in a net loss of $4.3 million or $0.05 loss per
share compared with $1.7 million net income or $0.02 earnings per share
during the third quarter of 2010.
-
The Company continues to enjoy a good relationship with its banking
group with total bank borrowings of $80.7 million at September 30,
2011. During the third quarter, the Company secured an additional $4.9
million loan from Shanghai Pudong Development Bank.
- The company maintains a total cash balance of $11.2 million at September 30, 2011
"As a result of record high corn prices, the third quarter was one of the most challenging for our industry," stated Mr. Zhiping Wang, President and CEO of Asia Bio-Chem. "We believe that the current market situation is temporary and with the upcoming record corn harvest we are confident that supply will be replenished and corn prices will ease allowing us to return to profitability. We have reduced our capital expenditures and implemented a cost cutting program in an effort to preserve cash and reduce our losses."
During the third quarter the company experienced a 38.5% improvement in revenues compared with the same periods of 2010. This increase was partly due to higher prices for by-products particularly germ where we realized a 35.7% improvement in prices from the third quarter of 2010. Higher starch prices and higher sales volumes also contributed to the improvement in revenues.
Higher product prices were, however not sufficient to offset the 22.3% increase in the Corn costs experienced in the third quarter compared with the same quarter of 2010. Compared with the second quarter of 2011, corn prices increased by 7.3% as demand for corn from the feed industry continued to push prices to record levels.
Consequently, gross margins were reduced to 2.5% resulting in a loss from operations of $3.2 million for the third quarter compared with a profit of $2.3 million during the same period of 2010.
SUMMARY FINANCIAL STATEMENTS
| in thousands of Canadian dollars except per share and percentage data |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||
| 2011 | 2010 | 2011 | 2010 | |||||
| Sales | 69,102 | 49,902 | 188,922 | 146,719 | ||||
| Gross profit | 1,732 | 5,983 | 18,124 | 22,347 | ||||
| Gross margin (% of Sales) | 2.5% | 12.0% | 9.6% | 15.2% | ||||
| Operating expenses | 4,915 | 3,711 | 15,998 | 11,479 | ||||
| Income from operations | (3,183) | 2,272 | 2,126 | 10,868 | ||||
| Other income (expense) | (1,221) | (641) | (2,718) | (2,278) | ||||
| Income taxes | (121) | (57) | (92) | 310 | ||||
| Net income | (4,283) | 1,688 | (500) | 8,279 | ||||
| EBITDA | (1,440) | 3,979 | 7,893 | 15,764 | ||||
| EBITDA before stock-based compensation | (1,293) | 4,330 | 8,708 | 17,376 | ||||
| Earnings per share: | ||||||||
| Basic | (0.05) | 0.02 | (0.01) | 0.11 | ||||
| Diluted | (0.05) | 0.02 | (0.01) | 0.11 | ||||
| Weighted average number of shares: | ||||||||
| Basic | 85,306,258 | 76,893,058 | 84,330,434 | 76,837,296 | ||||
| Diluted | 86,306,258 | 78,257,905 | 84,330,434 | 78,202,143 | ||||
| Balance Sheet Highlights | As at 9/30/11 | As at 12/31/10 | ||||||
| Cash | 6,073 | 5,642 | ||||||
| Working Capital | (2,599) | (11,981) | ||||||
| Total assets | 212,659 | 170,850 | ||||||
| Current Ratio | 0.97:1 | 0.82:1 | ||||||
Higher transportation and administrative expenses combined with lower gross profits caused EBITDA before stock-based compensation to decline to negative $1.3 million during the third quarter compared with positive $4.3 million during the same period of 2010.
Losses during the quarter combined with higher receivables caused the Company's cash position to decline to $11.2 million at September 30, 2011 from $18.4 million at June 30, 2011.
Daqing Downstream Update
As indicated in our previous quarter and update, management has chosen
to preserve capital and reduce the immediate commitments to the Daqing
downstream project by delaying completion by approximately 6 months.
Management remains committed to downstream expansion and expects to
commence construction when cash flows improve and additional debt
financing can be secured.
Conference Call
The Company will be hosting a conference call to discuss second quarter
results on Friday, November 11, 2011. The conference call and replay
details are as follows:
| Date: | Friday, November 11, 2011 | |||||||
| Time: | 9:00 AM EST | |||||||
| Dial in number: | 1-888-231-8191 or 647-427-7450 | |||||||
| Conference ID and | ||||||||
| Replay pass code: | 25075526 | |||||||
| Taped Replay: | 1-800-642-1687 or 416-849-0833 | |||||||
| (Available until November 25, 2011) |
About Asia Bio-Chem Group Corp.
Asia Bio-Chem Group, through its wholly-owned subsidiaries in the
People's Republic of China ("PRC"), is in the business of processing
corn. From its plants in Liaoning and Heilongjiang Province, the
Company has a total processing capacity of 900,000 tonnes of corn per
year, which are processed into cornstarch, corn germ, gluten, and fiber
for sale into the domestic Chinese market.
This news release contains certain statements that may be deemed "forward looking statements". Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects,", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although the Company believes the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. Forward looking statements are based on the beliefs, estimates and opinions of the Company's management on the date the statements are made. The Company undertakes no obligation to update these forward looking statements, except as required by law, in the event that management's beliefs, estimates or opinions, or other factors, should change.