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

TORONTO, Aug. 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 June 30, 2012.

Highlights

  • Lower starch prices, continued high corn costs combined with lower sales volume caused gross margin to decline to negative 4.0% during the second quarter compared with 12.2% during the same period in 2011.

  • The Company adjusted capacity in response to lower gross margins, which resulted in a 58% capacity utilization during the quarter.

  • Lower gross margin together with higher finance charges and interest during the second quarter resulted in a net loss of $8.2 million (-$0.10 per share) compared with $1.3 million net income ($0.02 per share) during the second 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 borrowings to $111.8 million at June 30, 2012 from $120.9 million at December 31, 2011 and maintains unrestricted cash balance of $5.8 million at June 30, 2012.

  • Management of the Company is taking steps to achieve economies in raw materials purchases and storage. Further, steps have been taken to alter the Company's commercial relationships with some of its customers to reduce the delinquent receivables outstanding.

  • In view of current economic conditions, the Company continues to defer the construction of its Daqing downstream expansion project.

"2012 continues to be a challenge for our industry as higher corn prices and soft customer demand suppress gross margins," stated Mr. Zhiping Wang, President and CEO of Asia Bio-Chem.  "We expect some declines in corn prices with this year's harvest however, higher import prices as a result of the drought in the US will keep the market tight."

As a result of lower margins, management has reduced capacity through intermittent plant closures.  During the second quarter, total production was 122,734 tonnes which represents a 28.7% reduction from the same quarter in 2011.

During the second quarter, an 8.8% increase in corn cost caused a negative gross margin of 4.0% compared with positive 12.2% during the same period in 2011.

Lower margins coupled with higher costs during the second quarter resulted in earnings before interest, taxes, depreciation and amortization ("EBITDA") to decline to negative $4.7 million compared with positive $4.4 million during the corresponding period in 2011.

SUMMARY FINANCIAL STATEMENTS

in thousands of Canadian dollars except per share and percentage data     Three Months Ended
June 30,
  Six Months Ended
June 30,
    2012   2011   2012   2011
Sales     49,510   68,670   81,996             119,820
Gross profit     (1,996)   8,404   (2,353)               16,393
Gross margin (% of Sales)     -4.0%   12.2%   -4.0%   13.7%
Operating expenses     4,781   6,344   8,783               11,083
Income (loss) from operations     (6,777)   2,060   (12,036)                 5,310
Other income (expense)     (1,743)   (524)   (3,556)               (1,497)
Income taxes (recoveries)     (287)   199   (1,825)                     30
Net income (loss)     (8,233)   1,336   (13,768)                 3,783
EBITDA     (4,685)   4,379   (7,824)                 9,333
EBITDA before stock-based compensation   (4,559)   4,696   (7,551)               10,000
Earnings per share:                  
 Basic       (0.10)                  0.02   (0.16)                   0.05
 Diluted       (0.10)                  0.02   (0.16)                   0.04
Weighted average number of shares:                
 Basic       85,306,258   85,306,258   85,306,258          83,834,435
 Diluted       86,306,258   86,126,383   85,306,258          84,654,560
                   
Balance Sheet Highlights     As at 6/30/12   As at 12/31/11        
Cash     5,815   10,580        
Restricted Cash     15,436   25,040        
Working Capital     (24,619)             (9,963)        
Total assets     234,127             251,686        
Current Ratio     0.81:1   0.93:1        

During the second quarter of 2012, net loss was $8.2 million (-$0.10 per share) compared with a profit of $1.3 million ($0.03 per share) during the same period of 2011.

During the second quarter the Company's unrestricted cash position declined to $5.8 million from $10.6 million at December 31, 2011.  Total debt declined to $111.8 million at June 30, 2012 from $120.9 million at December 31, 2011.

Conference Call
Asia Bio-Chem will be hosting a conference call to discuss the second quarter results at 10:00 a.m. EST on Monday, August 13, 2012. The details are as follows:

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

17664778
Taped Replay: 1-855-859-2056 or 416-849-0833
(Available until August 27, 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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