Asia Bio-Chem Group Corp. Announces 2010 Fourth Quarter and Fiscal Year End Financial Results

Mar. 15, 2011 (Canada NewsWire Group) --

TORONTO, March 15 /CNW/ - Asia Bio-Chem Group Corp. (TSX: ABC) ("Asia Bio-Chem" or the "Company") is pleased to announce its financial results for the three-month period and fiscal year ending December 31, 2010.

2010 Highlights

• During fiscal 2010, the Company achieved a number of significant milestones including the successful ramp up of the Daqing facility and the upgrade and relocation of the Changtu facility.
• Since first going into production in the first quarter of 2010, the Daqing facility has undergone continuous improvements in supply and logistics channels and has achieved over 90% capacity during the fourth quarter of 2010.  As a result of this success at the Daqing facility, the Company achieved 118% growth in revenues and 101% growth in gross profit compared with fiscal 2009. 
• The Company's Changtu plant completed its equipment upgrade and relocation during the third and fourth quarters of 2010 and is now fully compliant with international industry standards.  The Changtu plant is currently ramping up production and expects to achieve 40% average capacity utilization during the first quarter of 2011.
• The successful ramp up of the Company's Daqing facility, coupled with continued strong starch prices, contributed to a doubling of gross profit during fiscal 2010 to $28.9 million.  This gross margin was achieved with only 68% average production capacity given that Daqing was ramping up and Changtu had been closed temporarily during relocation.
• The Company has successfully managed its transportation, general and administrative expense to achieve 379% growth in income from operations and 326% growth in EBITDA during 2010 over the previous year.
• Net income increased by 428% to $11.1 million during 2010 compared with 2009.
• As at December 31, 2010, the Company had $5.6 million in cash and $62.1 million in government and bank debt.
• Subsequent to year end, the Company completed a prospectus-deal financing with gross proceeds of $11.6 million, which will be used to finance an expansion of its product offering at the Daqing facility.  This product expansion will involve the further refinement of starch into higher-margin downstream products.

"2010 was a year of growth and great accomplishment for our Company.  Bringing the Daqing plant on-line and completing the operational improvements at Changtu have positioned us as a leader in production process and quality in the Chinese corn processing industry," stated Mr. Zhiping Wang, President and CEO of Asia Bio-Chem.  "With our recent financing and expansion into downstream products, we are very excited about our growth going forward."

During the fourth quarter, sales increased by 100% largely due to higher sales volumes with the addition of the Daqing facility, which was completed in October 2009.  Total production increased by 83.7% to 127,534 tonnes. Gross profit increased by 45.5% to $6.6 million primarily attributable to higher starch prices and the additional sales from the Daqing facility. 

During the fourth quarter, gross margin declined to 14.2% from the corresponding period in 2009 due to lower average prices of gluten and fibre and the higher average prices of corn.  Compared with the third quarter of 2010, however, gross margins recovered as local shortages of corn were addressed. 

Earnings before interest, taxes, depreciation and amortization ("EBITDA") during the fourth quarter increased by 127.8% to $5.4 million, as the Company benefited from higher starch prices, additional earnings from the Daqing operations, and lower stock-based compensation.

SUMMARY FINANCIAL STATEMENTS

During 2010, the Company's cash position declined to $5.6 million and total debt increased to $62 million as at December 31, 2010.  This was primarily due to increased working capital associated with Daqing and the investments in the upgrade and relocation of the Changtu facility.

Changtu Corn Bio Chemical Project
During the fourth quarter, the Company completed the first phase ("Phase 1") of the Changtu Corn Bio Chemical Industrial Park.  This Phase 1 project involved the upgrade of production equipment and processes to improve efficiencies by reducing steam, electricity, and water usage.  These upgrades enable the Company to satisfy the latest production standards of the international food and beverage industry, thereby positioning it to qualify for larger contracts.  

As of the end of the fourth quarter, the Changtu facility was successfully upgraded and relocated.  The Company is currently ramping up production at Changtu and expects to achieve an average utilization rate of 40% during the first quarter of 2011.

Daqing Downstream Expansion  Project
On January 12, 2011, the Company announced that it will construct a downstream production facility adjacent to the Company's Daqing plant. This project will eventually use approximately 250,000 tonnes of cornstarch produced at its Daqing plant for further processing into downstream products including crystallized glucose and may include other products such as maltodextrin and/or sorbitol.  The Company expects to achieve gross margin on the new downstream products in excess of that on current third-party starch sales. 

The capital cost of this project is expected to be approximately $30 million and the Company anticipates that it will require an additional $10 million of working capital.  This project is expected to be funded with a combination of existing credit facilities, new credit facilities, cash flow from operations, and the proceeds from the prospectus financing mentioned above.  To date, the Company has made deposits of approximately $6.1 million to this project primarily for equipment.  The Company expects to complete this expansion project in the fourth quarter of 2011.

Conference Call
Asia Bio-Chem will be hosting a conference call to discuss the fourth quarter and year end quarter results at 10:00 a.m. EST on Wednesday, March 16, 2011. The details are as follows:

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.

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