Asia Bio-Chem Group Corp. Announces First Quarter 2012 Financial Results

TORONTO, May 10, 2012 /CNW/ - Asia Bio-Chem Group Corp. (TSX: ABC) ("Asia Bio-Chem" or the "Company") announces its financial results for the three-month period ending March 31, 2012.

Highlights

• Lower products' prices, continued high corn costs combined with lower sales volume caused gross margin to decline to negative 3.9% during the first quarter compared with 15.6% during the same period in 2011.
• The Company adjusted capacity in response to lower gross margins which resulted in 31% capacity utilization during the quarter.
• Lower gross margin together with higher finance charges and interest during the first quarter resulted in a net loss of $5.5 million (-$0.06 per share) compared with $2.4 million net income ($0.03 per share) during the first quarter of 2011.
• Despite the difficult market situation, the Company continues to enjoy the strong support of its banking group as well as the local governments in Changtu and Daqing. 
• The company has reduced its total bank borrowings during the quarter to $113.6 million and maintains a total cash balance of $5.8 million at March 31, 2012.
• Management of the Company is taking steps to improve its annual raw materials purchases and storage in an effort to stabilize gross margins.  Further, steps have been taken to alter the Company's commercial relationships with some of its customers to reduce the receivables outstanding.
• In view of current economic conditions, the Company continues to defer the construction of its Daqing downstream expansion project.

"The first quarter of 2012 was disappointing in terms of our by-product prices as demand declined after Chinese New Year and lower quality corn resulted in lower germ prices," stated Mr. Zhiping Wang, President and CEO of Asia Bio-Chem.  "While we have seen some increases in starch prices during the first quarter, corn prices remain high for this time of year which continues to create a challenging environment for our industry."

During the first quarter, lower margins resulted in scheduled production limits resulting in a 58.2% reduction in production compared with the same period in 2011 to 65,196 tonnes.   Lower volumes coupled with reduced prices of germ and gluten during the first quarter of 2012 resulted in a 36.5% reduction in sales compared with the first quarter of 2011.

Lower germ and gluten prices coupled with a 3.2% increase in corn cost caused a negative gross margin of 3.9% compared with positive 15.6% during the same period in 2011.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") during the first quarter declined by 163.4%. to negative $3.1 million, as the Company experienced lower margins and higher costs including a $0.9 million provision against its allowance for doubtful accounts.

SUMMARY FINANCIAL STATEMENTS

in thousands of Canadian dollars except per share and percentage data				Three Months Ended March 31,
				2012		2011		% Change
Sales				32,486		51,150		-36.5%
Gross profit				(1,257)		7,988		-115.7%
Gross margin (% of Sales)				-3.9%		15.6%
Operating expenses				4,002		4,739		-15.5%
Income (loss) from operations				(5,259)		3,250		-261.8%
Other income (expense)				(1,813)		(973)		n/a
Income taxes (recovery)				(1,537)		(170)		n/a
Net income (loss)				(5,535)		2,446		-326.3%
EBITDA				(3,139)		4,954		-163.4%
EBITDA before stock-based compensation				(2,992)		5,305		-156.4%
Earnings per share:
	Basic			(0.06)		0.03
	Diluted			(0.06)		0.03
Weighted average number of shares:
	Basic			85,306,258		82,346,258
	Diluted			85,306,258		84,339,333

During the first quarter of 2012, net loss was $5.5 million (-$0.06 per share) compared with a profit of $2.4 million ($0.03 per share) during the same period of 2011.

During the first quarter the Company's unrestricted cash position declined to $5.8 million from $10.6 million at December 31, 2011.  Total debt declined to $113.6 million at March 31, 2012 from $120.9 million at December 31, 2011.

Conference Call

Asia Bio-Chem will be hosting a conference call to discuss the first quarter results at 10:00 a.m. EST on Friday, May 11, 2012. The details are as follows:

Dial in number: Conference ID and Replay pass code:	1-888-231-8191  or  647-427-7450 78551664
Taped Replay:	1-855-859-2056 or 416-849-0833 (Available until May 25, 2012)

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.

For Corporate Information: 

Robert Wilson
Executive Vice President
Asia Bio-Chem Group Corp.
Tel: [phone]
Email: [email protected]