|By PR Newswire||
|November 13, 2012 03:38 PM EST||
TORONTO, Nov. 13, 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 September 30, 2012.
Lower gluten and germ prices coupled with high corn costs caused gross
margin to decline to negative 8.1% during the third quarter compared
with 2.5% during the same period in 2011.
In response to negative gross margins, the Company adjusted production
volume to 57,000 tonnes during the quarter representing 27% of
Negative gross margin resulted in a net loss of $11.1 million (-$0.13
per share) compared with $4.3 million net loss (-$0.05 per share)
during the third quarter of 2011.
During the third quarter, the company reduced its total borrowings by
$3.7 million to $108.1 million at September 30, 2012.
The Company continues to enjoy the strong support of its banking group.
Since the end of the third quarter, the Company has successfully
renewed three of its short term credit facilities due in October and
November and has secured one new credit line in the amount of $4.5
million (RMB 29 million).
The Company maintains unrestricted cash balance of $6.4 million at
September 30, 2012.
- Management of the Company continues to manage its working capital position and has taken steps to alter the commercial relationships with some of its customers to reduce the delinquent receivables outstanding.
"The corn processing industry, and in particular, those producers in the northeast part of China have been subject to a variety of challenges," stated Mr. Zhiping Wang, President and CEO of Asia Bio-Chem. "On the cost side, the northeastern markets for corn have been tightened due to government purchasing while prices in the central and southern regions have come down due to corn imports directed to this region. With this imbalance in corn supply between these regions, the corn price in our area has become more expensive than in the central region of China. On the product pricing side, our product markets have suffered from a slowing Chinese economy, over capacity in the northeast and supply of cheaper products from the lower corn cost regions. These conditions are not consistent with historical experience and we believe them to be temporary."
As a result of negative margins, we have intentionally reduced capacity through a temporary closure of our Changtu plant for most of the quarter. During the third quarter, total production was 56,931 tonnes which represents a 64.5% reduction from the same quarter in 2011 and a 54% reduction from last quarter.
During the third quarter, corn cost has increased 4.2% from the third quarter of 2011 and 2.8% since last quarter. As discussed above, these increases were the result of a market imbalance between the northeast and the central and southern regions. This imbalance coupled with lower germ and gluten prices have caused a negative gross margin of 8.1% compared with positive 2.5% during the same period in 2011.
Negative margins coupled with a $5.4 million allowance for doubtful accounts resulted in earnings before interest, taxes, depreciation and amortization ("EBITDA") to decline to negative $7.9 million compared with negative $1.4 million during the corresponding period in 2011.
SUMMARY FINANCIAL STATEMENTS
|in thousands of Canadian dollars except per share and percentage data||
Three Months Ended
|Gross profit (loss)||(2,270)||1,732||-231.1%|
|Gross margin (% of Sales)||-8.1%||2.5%|
|loss from operations||(9,826)||(3,183)||208.7%|
|Income recoveries (taxes)||118||121||-2.5%|
|EBITDA before stock-based compensation||(7,855)||(1,293)||507.5%|
|Loss per share:|
|Weighted average number of shares:|
|Balance Sheet Highlights||As at 9/30/12||As at 12/31/11|
During the third quarter of 2012, net loss was $11.1 million (-$0.13 per share) compared with a loss of $4.3 million (-$0.05 per share) during the same period of 2011.
During the third quarter the Company's unrestricted cash position declined to $6.4 million from $10.6 million at December 31, 2011. Total debt declined to $108.1 million at September 30, 2012 from $120.9 million at December 31, 2011.
Asia Bio-Chem will be hosting a conference call to discuss the third quarter results at 10:00 a.m. EST on Wednesday, November 14, 2012. The details are as follows:
Dial in number:
1-888-231-8191 or 647-427-7450
Conference ID and
Replay pass code:
1-855-859-2056 or 416-849-0833
(Available until November 28, 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.
SOURCE Asia Bio-Chem Group Corp.
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