Asia Bio-Chem Group Corp. Announces Third Quarter 2010 Financial Results
TORONTO, Nov. 11 /CNW/ - Asia Bio-Chem Group Corp. (TSX: ABC) ("Asia Bio-Chem" or the "Company") is pleased to announce its interim financial statements for the three-month period ending September 30, 2010.
Interim Financial Results
Highlights
- During the third quarter of 2010, the Company achieved 115.1% increase in revenues to $49.9 million and a 54.3% increase in gross profit to $6.0 million compared with the corresponding period of 2009.
- The Daqing plant produced a total of 112,783 tonnes of product during the third quarter, representing approximately 80% of capacity. With the completion of the intermodal loading dock at the Daqing plant, we expect utilization to improve in the fourth quarter.
- With the closure of the Changtu facility since mid-August for upgrades and relocation, total production from the company declined by 14% from the second quarter to 147,740 tonnes. The relocation and upgrade of Changtu is progressing on schedule and we expect to begin production at the end of November.
- The addition of the Daqing plant coupled with continued improvement in product pricing contributed to an 89.2% increase in EBITDA before stock based compensation during the third quarter of 2010 compared with the same period in 2009. Net income increased $0.9 million or 103.7% in the third quarter of 2010 to $1.7 million compared with the same period in 2009.
- As at September 30, 2010, the Company had $7.3 million in cash and $52.5 million in government and bank debt.
"We are pleased to report that our new Daqing facility is running smoothly and has completed the construction and installation of the new loading dock system, which is under commissioning and acceptance by the Railroad Authorities and expected to be in use shortly," stated Mr. Zhiping Wang, President and CEO of Asia Bio-Chem. During the latest quarter, we faced some seasonal corn supply issues at Daqing which resulted in higher-than-expected costs. We have been working closely with the local government, farmers and suppliers to adjust the local supply chain to ensure that these issues do not persist."
With the temporary closure of the Changtu plant, sales, gross profit, and earnings declined from the levels achieved in the second quarter of 2010. Compared with the second quarter, gross profit, and earnings were also negatively affected by lower margins in the third quarter due to higher corn cost. The higher corn cost was primarily due to normal seasonality high and the abrupt demand locally from our plant in its first year of production.
SUMMARY FINANCIAL STATEMENTS
in thousands of Canadian dollars except per share and percentage data |
Three Months Ended | |||
September 30, 2010 | September 30, 2009 | % Change | ||
Sales | 49,902 | 23,202 | 115.1% | |
Gross profit | 5,983 | 3,877 | 54.3% | |
Gross margin (% of Sales) | 12.0% | 16.7% | ||
Operating expenses | 3,726 | 2,456 | 51.7% | |
Income from operations | 2,257 | 1,421 | 58.8% | |
Other income (expense) | (641) | (327) | ||
Income taxes | (71) | 265 | ||
Net income | 1,688 | 828 | 103.9% | |
EBITDA | 3,980 | 1,688 | 135.8% | |
EBITDA before stock-based compensation | 4,330 | 2,288 | 89.2% | |
Earnings per share | ||||
Basic | 0.02 | 0.01 | ||
Diluted | 0.02 | 0.01 | ||
Weighted average number of shares | ||||
Basic | 76,893,058 | 76,777,025 | ||
Diluted | 78,257,905 | 76,777,025 | ||
Balance Sheet Highlights | As at 9/30/10 | As at 12/31/09 | ||
Cash | 7,341 | 14,119 | ||
Working Capital | 4,081 | 1,685 | ||
Total assets | 157,512 | 142,282 | ||
Current Ratio | 1.08:1 | 1.04:1 |
During the first nine months of 2010, the Company's cash position declined to $7.3 million as at September 30, 2010 primarily due to increased working capital requirements, including supporting higher accounts receivable and inventory balances as well as investments in the upgrade of the Changtu facility.
Daqing Update
Production at Daqing has continued to be strong with production capacity utilization averaging at 80% during the quarter.
"The Company is pleased to report that the new intermodal loading system has been completed at the Daqing plant, and we will soon be starting to receive intermodal containers and continue to be able to load boxcars based on customer's shipping requirements. This intermodal loading system will enable us to commence continuous loading, which, in turn, should allow the plant to operate at a higher capacity. In addition, the expansion is expected to improve the rail-to-ship transfer and, therefore, allow quicker delivery to our customers," added Mr. Wang.
Changtu Corn Bio Chemical Project
During the third quarter, the Company began work on the Changtu Corn Bio Chemical Industrial Park, a project established in cooperation with the Changtu county government.
The first phase ("Phase 1") of the Changtu Corn Bio Chemical Industrial Park involves the upgrade and relocation of the Changtu plant to a new location. The upgrades undertaken in Phase 1 will improve efficiencies by reducing steam, electricity, and water usage. By completing these upgrades, the Company will satisfy the latest production standards of the international food and beverage industry and allow the Company to qualify for larger contracts.
Phase 1 includes the relocation of the Changtu facility to a new 190,000 square-meter location. These upgrades will improve efficiencies by reducing steam, electricity and water usage. Also by undertaking these upgrades the Company will satisfy the latest standards of the international food and beverage industry and allow the Company to qualify for larger contracts.
The cost of Phase 1 is approximately $12 million, of which $5.7 million was incurred during the third quarter. Most of these costs are related to new equipment, while the land and infrastructure have been provided by the county government at no cost to the Company with the exception of some small handling and land transfer fees. Phase 1 is progressing on schedule and is expected to start production by the end of November.
The location of the original Changtu facility will remain the property of the Company and will serve as a storage facility to allow the Company to manage a larger volume of its own grain supply for the new project.
Conference Call
Asia Bio-Chem will be hosting a conference call to discuss the third quarter results at 8:00 a.m. on Friday, November 12, 2010. The details are as follows:
Dial in number: | 1-888-231-8191 or 647-427-7450 | |||||||||
Taped Replay: | 1- 800-642-1687 or 416-849-0833 (available until November 26th, 2010) |
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Replay pass code: | 22253412 |
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 further information:
For Corporate Information:
Robert Wilson Executive Vice President Asia Bio-Chem Group Corp. Tel: 416-603-7500 Email: [email protected] |
Salvador Diaz Investor Relations The Equicom Group Inc. Tel: 416-815-0700 ext 242 Email: [email protected] |
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