Asia Bio-Chem Group Corp. Announces Second Quarter 2013 Financial Results

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Aug 14, 2013, 16:55 ET

TORONTO, Aug. 14, 2013 /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, 2013.

Highlights

During the second quarter, lower corn costs resulted in improved gross margin and lower operating losses compared with the same period of last year. The company achieved breakeven gross margin during the second quarter compared with a negative gross margin of 4.0% during the same period in 2012.
The Company continues to manage its capacity utilization in reaction to market conditions. During the second quarter the Company's Changtu and Daqing plants operated at approximately 30% capacity while the newly acquired Tieling facility remained closed.
As a result of depreciation and interest expenses from the addition of Tieling, net loss for the second quarter was $8.5 million (-$0.10 per share) compared with a net loss of $8.2 million (-$0.10 per share) during the second quarter of 2012.
The company achieved a 68.8% improvement in EBITDA during the second quarter to negative $1.5 million compared with negative $4.7 million during the second quarter of 2012.
The Company continues to enjoy the strong support of its banking group and successfully renewed or repaid $38 million in loans since December 31, 2012. Further, these loan renewals were achieved on more favorable terms as the Company was able to reduce the level of restricted cash by $44.1 (including $22.1 million restricted cash from Tieling) million during the first six months of the year.
The Company maintains unrestricted cash balance of $12.5 million at June 30, 2013.

"While we have seen some improvement from lower corn costs, our industry continues to struggle from soft customer demand in a weak Chinese economy," stated Mr. Zhiping Wang, President and CEO of Asia Bio-Chem. "Our results have also been suppressed this year due to the additional overhead associated with the addition of Tieling. However, we are pleased with how this acquisition has come together and believe that it positions us well for future growth as the market improves."

During the second quarter, total production was 63,634 tonnes which represents a 48.2% reduction from the same quarter in 2012.

During the second quarter, a 17.4% decline in corn cost caused an improvement in gross margin to negative 0.2% compared with negative 4.0% during the same period in 2012.

Improved margins were offset by higher costs associated with the addition of Tieling as net loss for the second quarter increased to $8.5 million from $8.2 million during the same period in 2012.

SUMMARY FINANCIAL STATEMENTS

in thousands of Canadian dollars except per share and percentage data	Three Months Ended June 30,
	2013	2012		% Change
Sales	31,818	49,510		35.7%
Gross profit	(79)	(1,996)		96%
Gross margin (% of Sales)	-0.2%	(4.0%	)
Operating expenses	5,400	4,781		12.9%
(loss) from operations	(5,479)	(6,777)		19.2%
Other income (expense)	(3,018)	(1,743)		-73.1%
Income taxes (recoveries)	3	(287)		101.0%
Net (loss)	(8,500)	(8,233)		-3.2%
EBITDA	(1,464)	(4,685)		68.8%
EBITDA before share-based compensation	(1,461)	(4,559)		68.0%
Earnings per share:
Basic	(0.10)	(0.10)
Diluted	(0.10)	(0.10)
Weighted average number of shares:
Basic	85,306,258	85,306,258
Diluted	85,380,139	85,306,258

Balance Sheet Highlights	As at 6/30/13	As at 12/31/12
Cash	12,538	5,043
Restricted Cash	9,123	31,142
Working Capital	(140,602)	(48,553)
Total assets	280,298	221,494
Current Ratio	0.35:1	0.68:1

During the second quarter, earnings before interest, taxes, depreciation and amortization ("EBITDA") improved to negative $1.5 million compared with negative $4.7 million during the corresponding period in 2012.

During the second quarter the Company's unrestricted cash position increased to $12.5 million from $5.0 million at December 31, 2012. With the acquisition of Tieling, total debt increased to $164.9 million at June 30, 2013 from $123.2 million at December 31, 2012.

Conference Call
Asia Bio-Chem will be hosting a conference call to discuss the second quarter results at 10:00 a.m. EST on Thursday, August 15, 2013. The details are as follows:

Dial in number:	1-888-231-8191 or 647-427-7450

Conference ID and Replay pass code:	29473242

Taped Replay:	1-855-859-2056 or 416-849-0833 (Available until August 22, 2013)

About Asia Bio-Chem Group Corp.
Asia Bio-Chem Group, through its wholly-owned subsidiaries in the People's Republic of China, is in the business of processing corn into cornstarch, germ and gluten for sale into the domestic Chinese market. From its plants in Liaoning and Heilongjiang Province, the Company has a total processing capacity of 1.5 million tonnes of corn per year.

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.