Deyu Agriculture Corp. Announces Fiscal Year 2012 Results and Schedule Results Conference Call and Website

BEIJING, March 28, 2013 /PRNewswire/ -- Deyu Agriculture Corp. (OTCBB: DEYU) (the "Company"), a Shanxi Province, China-based vertically integrated producer, processor, marketer and distributor of organic and other agricultural products made from corn and grains, today announced its financial results for the fiscal year ended December 31, 2012.

Fiscal Year 2012 Results:

  • Net revenue was $254.0 million compared to $261.6 million in 2011;
  • Gross profit was $44.7 million, increasing $1.6 million or 3.8% from $43.1 million in 2011;     
  • Gross margin increased to 17.6% for 2012 from 16.5% in 2011;
  • Net income available to common stockholders was $16.0 million compared to $17.3 million in 2011;
  • Earnings per diluted share was $1.30 on 12.6 million shares, compared to $1.42 on 12.5 million shares in 2011.

"In 2012, in order to move to a more sustainable growth approach, we reduced our reliance on bank loans to supplement our working capital for fast growth by decreasing our overall borrowings from banks from $14.4 million to $8.3 million," said Jianming Hao, Chief Executive Officer of the Company. "Even with a slight decrease of revenue and net income, we are still very pleased with our performance this year. We believe this strategic move significantly reduced our financial risks and can benefit the Company and our shareholders in the long term.

"We are glad to see that our recent acquisition, the Taizihu Group, which has a diversified product line of grain products and large production capacity, made a revenue contribution of $23.3 million. We are also currently working on building strategic alliances with large and well-branded companies such as Wen's Food Group Co., Ltd. ("WFG") and Beijing Suning Appliance Co., Ltd. ("Suning") to build our leading position in the industry," continued Mr. Hao.

"In October 2012 we elected a new President, Greg Chen, and increased our Board with the additions of Greg and Mr. Jan Poulsen," Mr. Hao added. "With Greg's experience in strategic development and operation management, and Jan's 20+ years of experience in both asset management and business development within the food and beverage industries, we are confident that we can continue to build on our progress."

Financial Results for the Fiscal Year Ended December 31, 2012

In fiscal year 2012, the Company's net revenue was $254.0 million, compared with $261.6 million for 2011, a decrease of $7.6 million, or 2.9%. Net revenue from the Corn Division for 2012 was $151.0 million, a decrease of $26.7 million, or approximately 15.0%, as compared to $177.7 million for 2011, which was primarily due to the reduction of working capital for inventory procurement supported by bank loans and bank notes. Net revenue from our Grain Division for 2012 was $73.8 million, an increase of $33.3 million, or 82.2%, as compared to $40.5 million for 2011. The increase was a combined result of an increase of $23.3 million of sales revenue added by the Taizihu Group and an increase of $18.2 million in sales revenue derived from newly retained institutional clients in 2012, partially offset by a decrease of $8.2 million in sales revenue in retail sales in supermarkets and conventional stores caused by the reduction of the sales of unprofitable products in some stores. Net revenue from our Bulk Trading Division for 2012 was $29.2 million, a decrease of $14.2 million, or 32.7% as compared to $43.3 million for 2011. This decrease was mainly attributable to the decrease of working capital supported by bank loans and bank notes.

The Company's gross profit increased by $1.6 million, or 3.8%, from $43.1 million for 2011 to $44.7 million for 2012. The increase was a combined result of a decrease of $6.1 million in the Corn Division, an increase of $9.6 million in the Grain Division and a decrease of $1.9 million in the Bulk Trading Division. Our gross margin increased from 16.5% for 2011 to 17.6% for 2012. Gross margin for our Corn Division was 15.4% for 2012, down from 16.5% for 2011, which was mainly attributable to the continuous increase in the purchase price of raw corn and supplemental procurement from suppliers while selling prices did not increase consistently. Gross margin for the Grain Division increased from 24.9% for 2011 to 26.7% for 2012, an, which was mainly a combined result of the increase of gross margin of retail sales caused by reducing the sales of unprofitable products in some stores and the decrease of gross margin derived from the addition of new product portfolios containing mixed gross margins that targeted a wider scope of customers. Gross margin for the Bulk Trading Division was 6.0% for 2012, down from 8.3% for 2011, which was mainly attributable to the increase of percentage of sales for certain types of grains with relatively lower gross margin.

The Company's operating expenses increased $4.3 million, or 20.1%, to $25.8 million for 2012 as compared to $21.5 million for 2011. This increase was primarily a combined result of the increase of freight charges caused by the rising costs of railway freight, advertisement expenses spent on brand promotion and distribution expenses, expenses added by the Taizihu Group, increased depreciation and amortization caused by newly-acquired buildings as well as increased payroll and other expenses.

The Company had net income available to common stockholders of $16.0 million for 2012, as compared to a net income of $17.3 million for 2011, a decrease of $1.3 million, or 7.7%. Earnings per diluted share was $1.30 on 12.6 million shares for 2012, compared to $1.42 on 12.5 million shares for 2011.

Recent Updates about the Company

In February 2012, the Company acquired the Taizihu Group, which has a well-established grain product line of grain products under well recognized brand names "Huichun" and "Taizihu". In June 2012, the Company formed a supply relationship with WFG, one of the largest modern multi-industry and trans-regional livestock enterprises, to which we will provide raw corn on a non-exclusive basis. In August 2012, the Company reached an agreement with Suning, one of the largest electrical and electronic appliance retailers in China, to supply it with refined packaged grain goods valued at 18.4 million USD for its commercial use.

In October 2012, the Company registered a subsidiary named Jilin Jinglong Agriculture Development Limited in Jilin Province, one of the main corn and grain producing areas in Chinatoexplore business in Northeast China, Also in October 2012, the China National Cereals and Oils Committee selected the Company's wholly-owned subsidiary, Detian Yu, as one of China's Top 100 Grain and Oil Enterprises. And in December 2012, the Company received approximately $209,000 (RMB 1.3 million) in subsidies from the Jinzhong city government, which will be used to support Deyu's business operations as well as the construction of its grains processing projects.

Business Outlook

"With the industrial and market resources we have established in the past few years, we are growing to be a more integrated agriculture company with a nationwide sales network covering manufacturers, grain traders, wholesalers, distributors, institutional clients and retail stores in China," said Jianming Hao. "In view of this goal we are now working on a digital platform to integrate the resources in the whole supply chain, and to deliver value-added services to farmers and our clients.

"In the future, our digital platform will not only provide our current clients and farmers with enhanced services, but also facilitate the extension of Deyu's value-added services to potential clients and farmers in different regions. In addition, we believe the platform can serve as Deyu's vital branding platform in the industry and marketplace. We believe we can compete more effectively by utilizing the platform to turn some key barriers imposed by the conventional approaches into strategic advantages," added Mr. Hao.

Conference Call

The Company will host a conference call on April 2, 2013 at 8:30 AM EDT to discuss the Company's results for the fiscal year ended December 31, 2012.

To join the conference call, use the dial-in information below. When prompted, ask for the "Deyu Agriculture Call" and/or be prepared to provide the conference ID.

Date:

4/2/2013

Time:

8:30 AM EDT

Conference Line Dial-In (US):

877-407-9205

International Dial-In:

201-689-8054

Conference ID#:

411546

Webcast Link:

http://www.investorcalendar.com/IC/CEPage.asp?ID=170716

Dial in at least 10 minutes before the call to ensure timely participation. A Teleconference Replay will be available until 11:59 PM April 16, 2013. To listen, please call 877-660-6853 within the United States or 201-612-7415 if calling internationally.

Utilize the conference ID # for replay: 411546

About Deyu Agriculture Corp.

Deyu Agriculture Corp. is a vertically integrated producer, processor, marketer and distributor of organic and other agricultural products made from corn and grains operating in Shanxi Province in the People's Republic of China. The Company has access of 20 years to over 109,000 acres of farmland in Shanxi Province for breeding, cultivating, processing, warehousing and distributing grain and corn products. We have a nationwide sales network covering manufacturers, grain traders, wholesalers, distributors, institutional clients and retail stores in China. Deyu Agriculture Corp.'s facilities include sophisticated production lines and modern warehouses with a total production capacity of over 105,000 tons for grain products, storage capacity of over 100,000 tons and annual turnover of 700,000 tons for corn products. The Company's website is located at www.deyuagri.com.

Safe Harbor Statements

This press release contains forward-looking statements made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon the current plans, estimates and projections of Deyu Agriculture Corp.'s management and are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; uncertainties related to conducting business in China, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. Therefore, you should not place undue reliance on these forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China, general economic conditions; geopolitical events and regulatory changes, availability of capital, changes in the agricultural industry, the Company's ability to maintain its competitive position. Additional Information regarding risks can be found in the Company's quarterly and annual reports filed with the U.S. Securities and Exchange Commission at www.sec.gov.

Company Contact:

Mr. Greg Chen, President
Deyu Agriculture Corp.
Tel: +1-646-499-5475
Email: gregchen@china-deyu.com

Ms. Amy He, Chief Financial Officer
Deyu Agriculture Corp.
Tel: +86-10-8273-2870 x8522
Email: amy@china-deyu.com

 

Financial Tables

 

DEYU AGRICULTURE CORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS




December 31,
2012


December 31,
2011

Assets







Current Assets







Cash and cash equivalents


$

4,937,279


$

8,741,703

Restricted cash



815,348



1,850,999

Accounts receivable, net



33,991,288



36,167,136

Due from related parties



397,214



587,108

Inventory



30,322,191



20,314,090

Advance to supplier



6,145,840



7,233,371

Prepaid expenses



1,453,184



391,537

Assets held for sale



-



1,634,274

Other current assets



340,456



2,204,934

Total Current Assets



78,402,800



79,125,152








Property, plant, and equipment, net



19,442,599



12,355,946

Construction-in-progress



2,614,491



-

Long-term Investment



58,426



-

Other assets



-



727,535

Intangible assets, net



13,389,075



10,651,844








Total Assets


$

113,907,391


$

102,860,477








Liabilities and Equity














Current Liabilities







Short-term loan


$

8,323,623


$

14,413,480

Accounts payable



5,179,729



1,833,190

Note payables



-



1,588,840

Advance from customers



2,249,282



8,488,272

Accrued expenses



1,506,776



1,149,205

Tax payable



305,712



-

Preferred stock dividends payable



229,171



219,721

Due to related parties



8,933,843



5,445,115

Other current liabilities



720,862



583,196

Total Current Liabilities                                                                     



27,448,998



33,721,019








Equity







Series A convertible preferred stock, $.001 par value, 
   10,000,000 shares authorized,  2,039,970 and
   1,997,467 shares outstanding, respectively



2,040



1,997

Common stock, $.001 par value; 75,000,000 shares
   authorized, 10,658,266 and 10,564,774 shares outstanding,
   respectively



10,658



10,565

Additional paid-in capital



20,781,439



20,367,138

Other comprehensive income



5,737,793



4,831,353

Retained earnings



59,500,134



43,491,465

Total Stockholders' Equity



86,032,064



68,702,518

Noncontrolling Interests



426,329



436,940

Total Equity



86,458,393



69,139,458








Total Liabilities and Equity


$

113,907,391


$

102,860,477

 

DEYU AGRICULTURE CORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME




For The Years Ended



December 31,



2012


2011






Net revenue


$

254,046,098


$

261,576,666

Cost of goods sold



(209,325,445)



(218,480,009)

Gross Profit



44,720,653



43,096,657








Selling expenses



(16,153,096)



(13,231,094)

General and administrative expenses



(9,619,036)



(8,222,182)

Total Operating Expenses



(25,772,132)



(21,453,276)

Operating income



18,948,521



21,643,381








Interest income



37,846



42,159

Interest expense



(1,477,304)



(805,601)

Non-operating income



665,270



(180,294)

Total Other Expenses



(774,188)



(943,736)








Income from continuing operations before income taxes



18,174,333



20,699,645

Income taxes



(1,765,514)



(184,384)

Income from continuing operations



16,408,819



20,515,261

Loss from discontinued operations, net of income taxes



-



(3,891,830)








Net income



16,408,819



16,623,431








Net loss attributable to noncontrolling interests:







  Net loss from continuing operations



46,599



38,673

Net loss from discontinued operations



-



1,101,255

Total net loss attributable to noncontrolling interests



46,599



1,139,928

Net income attributable to Deyu Agriculture Corp.



16,455,418



17,763,359

Preferred stock dividends



(446,748)



(427,917)

Net income available to common stockholders



16,008,670



17,335,442

Foreign currency translation (loss) gain



910,907



2,751,687

Comprehensive income



16,919,577



20,087,129

Other comprehensive income attributable to noncontrolling interests



(4,467)



(130,653)

Comprehensive income attributable to Deyu Agriculture Corp.


$

16,915,110


$

19,956,476








Amounts attributable to common stockholders:







  Net income from continuing operations, net of income taxes


$

16,008,670


$

20,126,017

Discontinued operations, net of income taxes



-



(2,790,575)

Net income attributable to common stockholders


$

16,008,670


$

17,335,442








Net income attributable to common stockholders per share - basic:







  Income from continuing operations


$

1.51


$

1.91

Loss from discontinuing operations



-



(0.27)

Net income attributable to common stockholders


$

1.51


$

1.64








Net income attributable to common stockholders per share - diluted:







  Income from continuing operations


$

1.30


$

1.64

Loss from discontinuing operations



-



(0.22)

Net income attributable to common stockholders


$

1.30


$

1.42








Weighted average number of common shares outstanding - basic



10,598,603



10,522,432

Weighted average number of common shares outstanding - diluted



12,614,108



12,497,164

 

DEYU AGRICULTURE CORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS




For The Years Ended



December 31,



2012


2011

CASH FLOWS FROM OPERATING ACTIVITIES







   Net income available to common stockholders


$

16,008,670


$

17,335,442

   Loss from discontinued operations attributable to
   Deyu Agriculture Corp.



-



2,790,575

   Adjustments to reconcile net income to net cash provided
   by operating activities:







Depreciation &amortization



2,297,082



979,297

Allowance for doubtful accounts



-



-

Reserve for inventory valuation



-



-

Loss on disposal of fixed assets



577



-

Share-based compensation



120,853



428,702

Preferred stock dividends accrued



446,748



219,721

Dividends paid with Series A preferred stock



-



212,420

Common stocks issued for services



114,400



78,000

Grain on bargain purchase



(499,079)



-

Deferred income tax expense (benefit)



878,746



184,384

Noncontrolling interests



(46,599)



(38,673)

Decrease (increase) in current assets:







Accounts receivable



2,649,036



(23,824,017)

Related-parties trade receivable



226,755



(494,752)

Inventories



(8,383,187)



(2,873,705)

Advance to suppliers



1,987,857



(5,840,601)

Prepaid expense and other current assets



(40,331)



(539,339)

Increase (decrease) in liabilities:







Accounts payable



2,967,217



1,584,038

Advance from customers



(6,471,286)



1,677,638

Accrued expense and other liabilities



297,336



346,492

Net cash provided by (used in) operating activities of
continuing operations



12,554,795



(7,774,378)

Net cash used in operating activities of discontinued operations



-



(3,858,325)

Net cash provided by (used in) operating activities



12,554,795



(11,632,703)








CASH FLOWS FROM INVESTING ACTIVITIES







   Consideration paid for acquisition



(5,501,046)



-

   Construction and remodeling of factory and warehouses



(900,487)



(109,856)

   Purchase of machinery and equipment



(128,383)



(3,759,859)

   Advances to related parties



(33,294)



-

   Cash held by the Taizihu Group at acquisition date



20,272



-

   Repayment from (loan to) related parties



-



(76,995)

   Prepayments for acquisition of farmland use rights



-



(76,715)

Purchase of software and other assets



-



(8,902)

   Net cash used in investing activities of continuing operations



(6,542,938)



(4,032,327)

Net cash used in investing activities of discontinued operations



-



(2,476,523)

Net cash used in investing activities



(6,542,938)



(6,508,850)








CASH FLOWS FROM FINANCING ACTIVITIES







   Net (repayments of) proceeds from short-term loans from
   bank and others



(12,658,509)



11,349,219

   Net (repayments of) proceeds from short-term bank
   acceptance notes



(1,585,087)



1,547,269

   Cash released from restriction (restricted) for credit line of
   bank acceptance notes



1,281,894



(1,802,568)

   Net proceeds from short-term loans from related parties



3,312,931



3,101,839

   Payment of preferred dividends



(267,721)



(243,678)

   Proceeds from capital contributions



31,702



464,180

   Release of cash restricted held at a trust account



-



125,560

Net proceeds from short-term loan from others



-



952

  Net cash (used in) provided by financing activities of
  continuing operations



(9,884,790)



14,542,773

Net cash provided by financing activities of discontinued operations



-



5,918,988

Net cash (used in) provided by financing activities



(9,884,790)



20,461,761








EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH
EQUIVALENTS



68,509



352,429








NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS



(3,804,424)



2,672,637

NET DECREASE IN CASH & CASH EQUIVALENTS FROM
DISCONTINUED OPERATIONS



-



(403,208)

NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS
FROM CONTINUING OPERATIONS



(3,804,424)



3,075,845








CASH & CASH EQUIVALENTS, BEGINNING BALANCE



8,741,703



5,665,858

CASH & CASH EQUIVALENTS, ENDING BALANCE


$

4,937,279


$

8,741,703








SUPPLEMENTAL DISCLOSURES:







Income tax paid


$

678,420


$

62

Interest paid


$

1,815,269


$

809,448

NONCASH INVESTING AND FINANCING ACTIVITIES:







Construction completed and transferred to property, plant,
and equipment


$

-


$

5,914,602

Construction completed and transferred to land use rights


$

-


$

2,320,904

Obtained certificates of farmland use rights


$

-


$

8,221,569

Note: Please refer to the Company's annual report on Form 10-K for the year ended December 31, 2012 for additional notes, which are an integral part of these consolidated financial statements.

SOURCE Deyu Agriculture Corp.



RELATED LINKS
http://www.deyuagri.com
http://www.investorcalendar.com/IC/CEPage.asp?ID=170716

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.