BEIJING, May 21, 2013 /PRNewswire/ -- China New Borun Corporation (NYSE: BORN; "Borun" or the "Company"), a leading producer and distributor of corn-based edible alcohol in China, today announced unaudited financial results for the first quarter of 2013.
Mr. Jinmiao Wang, Chairman and Chief Executive Officer of Borun, commented on the results, "I am pleased that Borun once again exceeded revenue guidance, remained profitable, and continued to forge ahead with our strategy and operations, despite facing market headwinds and lower demand due to the PRC's challenging macro-economic environment in the first quarter. This April, we were encouraged to witness an improvement in demand for our products, and correspondingly, we have raised our second quarter production volume. With higher production volume, our capacity utilization rate will improve, and given that we have secured adequate corn during the harvest season at favorable price, we believe that Borun will remain profitable during a very challenging environment for the edible alcohol industry."
Mr. Wang added, "During the first quarter, we further optimized our sourcing capacity by using a combination of short-term borrowings and the bond proceeds issued in January to pre-purchase 300,000 tons of corn in the harvest season. We are also diversifying into the promising and complementary foam insulation market. Our construction of the new foam insulation and chlorinated polyethylene plant is, thus far, on schedule and on budget, and we expect to begin trial production by the third quarter of this year. We believe these initiatives will ultimately drive our long-term revenue growth and margin expansion, while at the same time lower our market concentration risks."
First Quarter 2013 Quick View
[1] This press release contains translations of certain Renminbi amounts into US dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to US dollars for the period ended March 31, 2013 were made at a rate of RMB6.2689 to USD1.00, the rate published by the People's Bank of China on March 31, 2013. China New Borun Corporation makes no representation that the Renminbi or US dollar amounts referred to in this press release could have been or could be converted into US dollars or Renminbi, at any particular rate or at all. |
First Quarter 2013 Financial Performance
For the first quarter of 2013, revenue decreased by 37.5% year-over-year to RMB450.7 million ($71.9 million) from RMB721.2 million in the same period of 2012. The decrease in revenue was mainly attributable to lower average selling price and a decrease in sales volume of edible alcohol due to weaker demand from the baijiu and chemical industries.
Revenue breakdown by product lines is as follows:
During the first quarter of 2013, gross profit decreased by 57.1% to RMB47.1 million ($7.5 million) from RMB109.9 million in the same period of 2012. Gross margin for the first quarter of 2013 decreased to 10.4%, from 15.2% in the same period of 2012, which was primarily attributable to a combination of increased corn purchase price and decreased average selling price.
Operating income, despite a lower year-over-year level of operating expenses, decreased by 61.5% to RMB36.2 million ($5.8 million) in the first quarter of 2013, from RMB94.1 million in the same period of 2012, primarily due to lower gross profit earned.
Selling expenses decreased by 9.8% to RMB1.1 million ($0.2 million) in the first quarter of 2013, from RMB1.2 million in the same period of 2012, in line with the decrease in revenue.
General and administrative expenses decreased by 32.7% to RMB9.8 million ($1.5 million) in the first quarter of 2013, from RMB14.6 million in the same period of 2012, benefiting from disciplined cost control.
Income tax expenses in the first quarter of 2013 were RMB4.3 million ($0.7 million), representing an effective tax rate of 25.0%.
Net income decreased by 80.0% to RMB12.8 million ($2.0 million) in the first quarter of 2013, compared to RMB63.7 million in the same quarter of 2012. In the first quarter of 2013, basic and diluted earnings per share and per ADS were RMB0.50 ($0.08), and the Company had 25.7 million weighted average basic and diluted shares outstanding.
As of March 31, 2013, reflecting the large corn pre-purchase, cash and bank deposits of RMB394.3 million ($62.9 million) decreased by RMB216.4 million, compared with RMB610.7 million as of December 31, 2012. Correspondingly, cash flows used in operating activities for the first quarter of 2013 were RMB554.7 million ($88.5 million) mainly due to cash pre-payments for corn. As of March 31, 2013, advance to supplier balance was RMB546.9 million ($87.2 million), representing an increase of RMB479.1 million, compared with RMB67.8 million as of December 31, 2012.
Financial Outlook
The Company estimates that its revenue for the second quarter of 2013 will be in the range of RMB550.0 million ($87.7 million) to RMB600.0 million ($95.7 million), an increase of 22.0% to 33.1% over the prior quarter and a decrease of approximately 25.3% to 31.6% over the same quarter in 2012.
This guidance is based on the current market conditions and reflects the Company's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change.
Conference Call
Borun's management will hold a corresponding earnings conference call and live webcast at 8:00 a.m. E.T. on Tuesday, May 21, 2013 (8:00 p.m. Beijing time on Tuesday, May 21, 2013) to discuss the results and highlights from the first quarter and answer questions from investors. A webcast of the call will be available at http://ir.chinanewborun.com. Listeners may access the call by dialing:
United States Toll Free: 1-866-519-4004
US Toll/International: 1-718-354-1231
Hong Kong Toll Free: 800-930-346
Hong Kong Toll: 852-2475-0994
China Toll Free: 800-819-0121
China Toll Free (Mobile): 400-620-8038
Conference ID: 64851810
A replay of the webcast will be accessible through May 29, 2013 on http://ir.chinanewborun.com or by dialing:
United States toll free: 1-855-452-5696
International: 61-2-8199-0299
Passcode: 64851810
About China New Borun Corporation
China New Borun Corporation (NYSE: BORN) is a leading producer and distributor of corn-based edible alcohol in China. Borun's edible alcohol products are primarily sold as an ingredient to producers of baijiu, a popular grain-based alcoholic beverage that is sold throughout China in retail stores, restaurants, and bars. The Company also produces DDGS Feed, liquid carbon dioxide and crude corn oil as by-products of edible alcohol production. China New Borun is based in Shouguang, Shandong Province. Additional information about the company can be found at http://www.chinanewborun.com and in documents filed with the U.S. Securities and Exchange Commission, which are available on the SEC's website at www.sec.gov.
Forward-looking Statements
All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.
Contact Information
Asia Bridge Capital Limited
Wendy Sun
Phone:
+86-10-8556-9033 (China)
+1-888-870-0798 (U.S.)
Email: wendy.sun@asiabridgegroup.com
CHINA NEW BORUN CORPORATION | |||||
UNAUDITED CONSOLIDATED BALANCE SHEETS | |||||
December 31, 2012 | March 31, 2013 | ||||
RMB | RMB | US$ | |||
Assets | |||||
Cash | 610,692,645 | 394,335,855 | 62,903,517 | ||
Restricted cash | 75,000,000 | 272,500,000 | 43,468,551 | ||
Trade accounts receivable, net of allowance for doubtful | 302,779,899 | 283,661,545 | 45,249,014 | ||
Available-for-sale financial assets | ———— | 17,778,718 | 2,836,019 | ||
Inventories | 138,280,880 | 245,287,637 | 39,127,700 | ||
Advance to suppliers | 67,828,505 | 546,905,650 | 87,241,087 | ||
Other receivables | 34,880,868 | 44,633,556 | 7,119,839 | ||
Prepaid expenses | 6,039,816 | 16,623,239 | 2,651,700 | ||
Total current assets | 1,235,502,613 | 1,821,726,200 | 290,597,427 | ||
Property, plant and equipment, net | 1,047,934,015 | 1,123,937,601 | 179,287,850 | ||
Land use right, net | 56,432,887 | 56,145,253 | 8,956,157 | ||
Intangible assets, net | 13,475,014 | 12,518,453 | 1,996,914 | ||
Other non-current assets | 89,648,135 | 89,648,135 | 14,300,457 | ||
Total assets | 2,442,992,664 | 3,103,975,642 | 495,138,805 | ||
Liabilities and shareholders' equity | |||||
Trade accounts payable | 12,605,132 | 11,031,031 | 1,759,644 | ||
Accrued expenses and other payables | 63,942,736 | 117,714,304 | 18,777,505 | ||
Income taxes payable | 6,661,771 | 7,484,511 | 1,193,911 | ||
Short-term borrowings | 842,200,000 | 991,800,000 | 158,209,574 | ||
Total current liabilities | 925,409,639 | 1,128,029,846 | 179,940,634 | ||
Long-term borrowings | ———— | 90,000,000 | 14,356,586 | ||
Bonds payable | ———— | 355,605,833 | 56,725,396 | ||
Total liabilities | 925,409,639 | 1,573,635,679 | 251,022,616 | ||
Shareholders' equity | |||||
Ordinary share - (December 31, 2012 and March 31, 2013: par value of RMB0.0068259, 25,725,000 shares issued and outstanding) | 175,596 | 175,596 | 25,725 | ||
Additional paid-in capital | 468,132,187 | 468,132,187 | 74,675,332 | ||
Retained earnings - appropriated | 118,401,996 | 118,401,996 | 18,887,204 | ||
Retained earnings - unappropriated | 931,347,064 | 944,100,697 | 150,600,695 | ||
Accumulated other comprehensive loss | (473,818) | (470,513) | (72,767) | ||
Total shareholders' equity | 1,517,583,025 | 1,530,339,963 | 244,116,189 | ||
Total liabilities and shareholders' equity | 2,442,992,664 | 3,103,975,642 | 495,138,805 | ||
CHINA NEW BORUN CORPORATION | |||||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | |||||||
For the three-month period ended, | |||||||
March 31, 2012 | December 31, 2012 | March 31, 2013 | |||||
(RMB) | (RMB) | (RMB) | (US$) | ||||
Revenues | 721,175,850 | 503,375,028 | 450,692,059 | 71,893,324 | |||
Cost of goods sold | 611,298,467 | 448,934,524 | 403,601,450 | 64,381,542 | |||
Gross profit | 109,877,383 | 54,440,504 | 47,090,609 | 7,511,782 | |||
Operating expenses: | |||||||
Selling | 1,162,789 | 1,286,558 | 1,049,336 | 167,388 | |||
General and administrative | 14,580,533 | 10,238,935 | 9,808,797 | 1,564,676 | |||
Total operating expenses | 15,743,322 | 11,525,493 | 10,858,133 | 1,732,064 | |||
Operating income | 94,134,061 | 42,915,011 | 36,232,476 | 5,779,718 | |||
Other (income) expenses: | |||||||
Interest income | (319,400) | (438,967) | (626,090) | (99,872) | |||
Interest expense | 9,555,927 | 14,371,023 | 19,879,666 | 3,171,157 | |||
Others, net | (15,898) | 194,026 | (25,944) | (4,139) | |||
Total other expense, net | 9,220,629 | 14,126,082 | 19,227,632 | 3,067,146 | |||
Income before income taxes | 84,913,432 | 28,788,929 | 17,004,844 | 2,712,572 | |||
Income tax expense | 21,228,358 | 7,197,232 | 4,251,211 | 678,143 | |||
Net income | 63,685,074 | 21,591,697 | 12,753,633 | 2,034,429 | |||
Earnings per share: | |||||||
Basic and diluted | 2.48 | 0.84 | 0.50 | 0.08 | |||
Weighted average ordinary shares | |||||||
Basic and diluted | 25,725,000 | 25,725,000 | 25,725,000 | 25,725,000 | |||
