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Message: Announces Fiscal 2009 First Quarter Financial Results
| February 12, 2009 | ||
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Migao Announces Fiscal 2009 First Quarter Financial Results
Revenue and earnings increase three times over Q1 2008 |
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TORONTO, ONTARIO--(Marketwire - Feb. 12, 2009) - Migao Corporation (TSX:MGO), a China-based leading specialty potash fertilizer producer, is pleased to report revenue of $76.5 million for the three-month period ended December 31, 2008, representing a 210% increase compared to $24.7 million for the same quarter in 2007. EBITDA for the first quarter ended December 31, 2008 was $14 million or 18% of revenue as compared to $4 million or 16% of revenue in the same period in 2007. Net income was $12 million or 16% of revenue for the quarter compared to $3.1 million or 13% of revenue in the same quarter in 2007. Basic earnings per share were $0.27 for the quarter, compared to $0.08 per share in the same quarter in 2007. "Demand for our products remains strong in the face of the global economic downturn," said Mr. Liu Guocai, President and CEO of Migao. "Our quarterly results are in line with our expectations. The results include very little revenue contribution from the expansion of 60,000 tonnes per year of potassium sulphate at Guangdong Migao, which worked up to full production levels in January of this year and will be contributing at full production rates for the balance of the year and beyond." Gross margin remained in the target range at 22.6% of revenue. This is in line with expectations as raw material costs and selling prices did not change materially during the quarter as has been experienced in previous quarters. Gross margin includes startup costs with no offsetting revenue associated with the Guangdong Migao expansion of 60,000 tonnes of annual potassium sulphate production. The price and supply of Migao's primary raw material, potassium chloride, is currently being negotiated and the outcome of which will determine the Company's selling prices for the rest of the year. It is expected that the negotiations between China and the major potassium chloride producers will be concluded in the next 60-90 days. The increased revenue on a comparable period basis is a result of increased production capacity as well as increased selling prices, which went into effect in the summer of 2008 and have maintained since. Consumer demand for high value fruits and vegetables and tobacco in China remains strong and is growing. Certain crop customers of Migao have begun or increased the export of their crops during 2008 and expect to expand their international sales in 2009. At the end of the quarter, the Company had $46 million or approximately 60,000 tonnes of potassium chloride in inventory and $19 million of finished goods inventory on hand. Subsequent to the end of the quarter, the Company signed a purchase contract securing 70,000 tonnes of potassium chloride, further ensuring no disruption to the supply of a critical raw material. At the current annual run rate of 320,000 tonnes of specialty fertilizers, Migao requires approximately 260,000 tonnes of potassium chloride, of which half has been secured to date. As at December 31, 2008, Migao reported cash of $18 million and working capital of $117 million. At December 31, 2008, long-term debt was nil and current bank debt was $17 million. SUMMARY FINANCIAL STATEMENTS
3 months ended 3 months ended
December 31, 2008 December 31, 2007
($'000)
Sales 76,531 24,680
Gross Profit 17,313 5,840
Net Income 11,951 3,100
EBITDA 13,983 3,991
Basic EPS 0.27 0.08
Diluted EPS 0.27 0.08
Weighted average number of
shares (in millions of shares)
Basic 43.7 37.3
Diluted 43.9 40.1
Balance Sheet Highlights
($'000)
3 months ended 3 months ended
December 31, 2008 December 31, 2007
Current ratio 3.79:1 2.09:1
Cash 17,816 21,144
Working Capital 116,735 39,584
Total assets 249,709 124,870
Debt to Equity Ratio 0.20:1 0.41:1
On October 27, 2008, Migao announced that a 100,000 tonne per year compound fertilizer facility was being constructed at Sichuan Migao. The new specialty fertilizer will combine the Company's low-chloride potassium nitrate and or potassium sulphate with other essential crop nutrients to be applied directly to tobacco crops. This new facility makes the Company the largest provider of specialty fertilizer to the tobacco industry in China. The decision to expand the Company's line of business into compounding is a result of requests by Migao's largest customer for compound fertilizer. The Company plans to expand this line of business into other tobacco growing regions in China after the Sichuan facility is fully established at full production levels. The Sichuan-based facility is expected to begin full production in March 2009. The Company recently announced that it will change its fiscal year end to March 31 from the current fiscal year end of September 30. The change in year end has been made to better align Migao's financial reporting, tax planning, and business cycles with customers and suppliers. The change takes effect immediately and therefore Migao will report transitional fiscal 2009 financial results for the six-month period ending March 31, 2009. "Migao continues to meet its corporate revenue and profitability growth objectives in an environment where many industries are experiencing revenue and earnings declines," said Mr. Liu Guocai. "Migao is not immune to its industry's pressures and challenges; we have however, been successful in anticipating areas of pressure and preparing for challenges. For example, Migao's products are currently subjected to a 105% export tariff, negating the opportunity for international sales. As a result of this tariff, we have been exploring opportunities to expand our production capacity outside of China and we look forward to reporting on this progress as it develops." Conference Call Migao will be hosting a conference call to discuss the first quarter results at 10:00am Friday February 13, 2009. The details are as follows: Dial in number: 416-695-6320 or 1-866-852-2121 Taped replay (until February 20, 2009): 416-695-5800 or 1-800-408-3053 Taped replay access code: 3282707# Migao Corporation, through its wholly owned subsidiaries, owns and operates fertilizer production plants in various strategic locations across China for the production and sale of specialty potash fertilizers to China's agricultural market. Migao Corporation is subject to, and complies with strict government regulations that govern safety, quality and environmental protection. Please visit www.migaocorp.com for further information. |
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