Migao Reports Fiscal 2013 Second Quarter Financial Results
TORONTO, ONTARIO, Nov 15, 2012 (Menafn - MARKETWIRE via COMTEX) --Migao Corporation , a China-based specialty potashfertilizer producer, today reported financial results for the threeand six-month periods ended September 30, 2012.
Revenues for the second quarter ended September 30, 2012 were 11.7million as compared to revenues of 66.0 million for the three-monthperiod ended September 30, 2011. For the quarter, the Companyreported a net loss of 8.1 million or 0.15 per basic share ascompared to net income of 6.0 million or 0.11 per basic share forthe same period one year ago. The decline in revenue was impacted byseveral conditions that include continued weakness in hydrochloricacid market, seasonality of customer purchases, no sales of potassiumchloride, and overall lower selling prices.
The net loss was a result of decreased volumes and selling prices offinished goods, which impacted absorption of fixed and variablecosts. An inventory provision of 1.7 million made to reflect thevaluation of some raw material and some finished goods furtherimpacted earnings.
SUMMARY FINANCIAL STATEMENTS
3 months ended3 months ended
Sept. 30, 2012Sept. 30, 2011
Gross Profit (% of revenue)1.8%21.4%
Net Income (loss)(8,098)5,956
Weighted average number of shares (in
millions of shares)
Balance Sheet Highlights
Sept. 30, 2012March 31, 2012
Cash and restricted cash51,89068,924
Long Term Bank Debt to Equity Ratio0.01:10.01:1
"After comparing these second quarter results to the pipeline of salesactivity including secured contracts, it appears the situationshowing signs of improvement," said Mr. Liu Guocai, CEO of Migao. "Wehave focused our energies on negotiating contracts over the recentperiod and the success of these activities are proving themselves asevidenced by the increased delivery and production of our corefertilizers. We continue to face margin pressure from the impact ofthe hydrochloric acid business, however there have been specificindustry developments in the Chinese market that should result insome improvement to this business."
For the six months ended September 30, 2012 Migao reported revenuesof 48.4 million as compared to revenues of 166.5 million for thesix-month period ended September 30, 2011. For the first half offiscal 2013, the Company reported a net loss of 12.0 million or0.23 per basic share as compared to net income of 13.7 million or0.26 per basic share for the same period one year ago.
The Board of Directors of Migao Corporation declared a quarterly cashdividend of 0.015 for each common share, payable on December 13,2012 to shareholders of record on November 30, 2012. The dividendsare eligible pursuant to the Income Tax Act (Canada) and any similarprovincial legislation pertaining to eligible dividends.
The Company's gross profit margin of 1.8% for the quarter endedSeptember 30, 2012 was primarily attributed to the decreased salesvolume and product pricing. Gross profit margin is expected toimprove beginning in the third quarter.
It is anticipated that Sichuan Migao and Liaoning Migao will operateat full capacity for the balance of fiscal 2013. The Company's jointventure potassium nitrate facility is anticipated to be at fullcapacity for the balance of fiscal 2013, as well as the specialtycompound facility at Zunyi Migao. It is anticipated that GuangdongMigao will reach approximately 60-70% of capacity, Changchun Migao at50-60%, and Shanghai Migao at 50-60% of capacity by the end of fiscal2013.
At the end of the period, the Company had 49.4 million (98,925tonnes) of potassium chloride inventory with an average deliveredprice of 499 per tonne, of which 89,796 tonnes were on hand with theremainder being in transit. In addition, during the quarter, theCompany sold 5,075 tonnes of potassium nitrate, 10,931 tonnes ofpotassium sulphate, nil of compound fertilizer, nil tonnes ofpotassium chloride, and at the end of the period, the Company had45.6 million (106,604 tonnes) of finished goods inventory on hand,including co-products.
At September 31, 2012, Migao reported cash and restricted cash of51.9 million and working capital of 192.1 million.
Migao will be hosting a conference call to discuss the quarterly results at
9:00am, Eastern Time, Thursday November 15, 2012. The details are as
Dial in number: 416-340-2217 or 1-866-696-5910 and passcode 7994003
Taped replay (until November 29, 2012): 905-694-9451 or 1-800-408-3053
Taped replay access code: 732036#
Migao Corporation, through its wholly owned subsidiaries, owns andoperates fertilizer production plants in various strategic locationsacross China for the production and sale of specialty potashfertilizer (potassium nitrate and potassium sulphate) to China'sagricultural market. Migao Corporation is subject to, and complieswith strict government regulations that govern safety, quality andenvironmental protection. Migao's Sichuan facility is ISO 14001certified, an international environmental management standard. Pleasevisit www.migaocorp.com for further information.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This news release may include forward-looking statements within themeaning of certain securities laws, including the "safe harbour"provisions of the Securities Act (Ontario) and other provincialsecurities laws in Canada. These forward-looking statements include,among others, statements with respect to our objectives and goals,and strategies to achieve those objectives and goals, as well asstatements with respect to our beliefs, plans, objectives,expectations, anticipations, estimates and intentions. The words"may", "will", "could", "should", "would", "suspect", "outlook","believe", "plan", "anticipate", "estimate", "expect", "intend","forecast", "objective", and "continue" (or the negative orgrammatical variations thereof), and words and expressions of similarmeaning, are intended to identify forward-looking statements.
By their very nature, forward-looking statements involve inherentrisks and uncertainties, both general and specific, which give riseto the possibility that predictions, forecasts, projections and otherforward-looking statements will not be achieved. Certain materialfactors or assumptions are applied in making forward-lookingstatements and actual results, performance or achievements may differmaterially from those expressed or implied in such statements. Wecaution readers not to place undue reliance on forward-lookingstatements as a number of important factors, many of which are beyondour control, could cause actual results, performance or achievementsto differ materially from the beliefs, plans, objectives,expectations, anticipations, estimates and intentions expressed insuch forward-looking statements. These factors that relate to ourcompany include, but are not limited to: risks related to rawmaterials; execution of the business plan; expansion plans;dependence on key personnel; key relationships; dependence on keycustomers; dependence on key suppliers; competition; market factorsand volatility of commodity prices; environmental risks and hazards;operating risks; proprietary rights; infrastructure; future capitalrequirements; technical substitution; exchange rate fluctuations;insurance; foreign operations; tobacco industry considerations;weather conditions and natural disasters; control by management;seasonality; dividends; conflicts of interest; global financialconditions; and the implementation of the Labour Contract Law in thePeople's Republic of China in 2008. In addition to the foregoing riskfactors, there are also risks related to doing business in Chinawhich include, but are not limited to: state ownership; governmentsector intervention; foreign investment; repatriation of profit andcurrency conversion; tax; shareholders' rights and enforcement ofjudgements; developing legal system; protection of intellectualproperty rights; permits and business licenses; appropriation; andavailability of land. Should one or more of these factorsmaterialize, or should our estimates or underlying assumptions proveincorrect, actual results, performance or achievements may varymaterially from those described in forward-looking statements.
We caution that the foregoing list of important factors that mayaffect our future results, performance or achievements is notexhaustive. When reviewing our forward-looking statements, readersshould carefully consider the foregoing factors and otheruncertainties and potential events. Additional information aboutfactors that may cause actual results to differ materially fromexpectations, and about material factors or assumptions applied inmaking forward-looking statements, may be found under the "RiskFactors" sections in our Annual Information Form and annual MD&A andelsewhere in our filings with Canadian securities regulatoryauthorities. Except as required by Canadian securities laws, we donot undertake to update any forward-looking statements, whetherwritten or oral, that may be made from time to time by us or on ourbehalf; such statements speak only as of the date made. We cannotassure readers that actual results, performance and achievements willbe consistent with these forward-looking statements, and thedifferences may be material. The forward-looking statements includedherein are expressly qualified in their entirety by this cautionarylanguage.
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SOURCE: Migao Corporation
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