Quantcast
Last updated on April 24, 2014 at 21:24 EDT

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

May 10, 2012

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                       Three Months Ended March 31,
    Canadian dollars
    except per share
    and percentage
    data                             2012                2011      % Change

    Sales                                                            -36.5%
                                      32,486              51,150

    Gross profit                                                    -115.7%
                                     (1,257)               7,988

    Gross margin (%                    -3.9%               15.6%
    of Sales)

    Operating                                                        -15.5%
    expenses                           4,002               4,739

    Income (loss)                                                   -261.8%
    from operations                  (5,259)               3,250

    Other income                                                        n/a
    (expense)                        (1,813)               (973)

    Income taxes                                                        n/a
    (recovery)                       (1,537)               (170)

    Net income (loss)                                               -326.3%
                                     (5,535)               2,446

    EBITDA                                                          -163.4%
                                     (3,139)               4,954

    EBITDA before                                                   -156.4%
    stock-based                      (2,992)               5,305
    compensation

    Earnings per
    share:

       Basic
                                      (0.06)                0.03

       Diluted
                                      (0.06)                0.03

    Weighted average
    number of shares:

       Basic                                          82,346,258
                                  85,306,258

       Diluted                                        84,339,333
                                  85,306,258

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:    1-888-231-8191  or  647-427-7450
    Conference ID and
    Replay pass code:  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.

SOURCE Asia Bio-Chem Group Corp.


Source: PR Newswire