Migao Corporation (TSX: MGO), a China-based leading specialty potash fertilizer producer, today reported quarterly earnings of $0.18 per share from sales of $67.0 million for the three-month period ended December 31, 2009, compared to earnings of $0.27 per share from sales of $76.5 million for the same period last year.
Revenue for the nine-month period of fiscal 2010 was $193.6 million, which is slightly below the $204.4 million in revenue for the similar nine-month period last year. Net income for the nine-month period ended December 31, 2009 was $27.9 million or $0.60 per basic share as compared to $31.6 million or $0.73 for the same nine-month period last year. The decline in sales and earnings is indicative of lower input costs, which is reflected in the Company's selling price of its potash-based specialty fertilizer products.
"Our revenue and gross profit percentage has been relatively stable despite lower average selling prices compared to last year, as a result of lower raw material costs. Our operational results are slightly ahead of expectations for this period with the volume of product sold increasing compared to the same period last year. 100% of our production capacity was sold in the quarter," said Mr. Liu Guocai, President and CEO of Migao. "From the end of last quarter to the beginning of this quarter, we believe we saw the bottom of potash prices as well as Migao's selling prices in China. Selling prices have trended up towards the end of the third quarter and we have received orders for all of our production capacity through to the end of May."
Gross profit for the quarter was $15.6 million or 23.3% of revenue. For the first three quarters of fiscal 2010, gross margin is in line with management's expectations for the fiscal year at 23.0% or $44.6 million.
rolex replica Production for the quarter was approximately 100% of core capacity including regular minimum required maintenance performed during the quarter. In addition, approximately 50,000 tonnes of non-core, lower grade potassium sulphate was processed and sold to new vegetable crop customers.
The effective income tax rate for the quarter was approximately 13.5% of revenue. The Company is fake rolex benefiting from grandfathered favourable tax policies, which would otherwise result in a corporate tax rate of 25%, not including any other, or new favourable tax treatments. EBITDA for the third quarter of fiscal 2010 was $11.6 million or 17.3% of revenue.
As at December 31, 2010, Migao reported cash and equivalents of $128.0 million and working capital of $184.6 million. Cash and inventory make up the vast majority of working capital. Long-term debt was nil and current bank debt was $40.9 million. During the quarter, the Company secured working capital lines of credit with a China-based bank of approximately RMB 260 million and project financing lines of credit of approximately RMB 136 million. Migao also successfully completed a bought deal financing of common shares for net proceeds of $38 million. Proceeds are to be used for expansion projects and general working capital purposes.
The Company continues to conduct due diligence and negotiations for potential expansion into Southeast Asia. A Chinese export tariff of 105% on potash and related products, including Migao's potassium sulphate precludes the Company from competing in nearby, international markets. The market for Migao's potassium sulphate product outside of China is strong and growing.
Average inventory cost of raw potash for the period was $389 per tonne, a decrease from the previous period's level of $476, reflecting declining raw material purchase costs for th
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