DAQING, China, Aug. 15, 2011 /PRNewswire-Asia-FirstCall/ --
China Nutrifruit Group Limited (NYSE Amex: CNGL) ("China
Nutrifruit" or "the Company"), a leading producer of premium
specialty fruit based products in China ("PRC"), today announced its financial
results for the first quarter fiscal year 2012, ended June 30, 2011.
First Quarter Fiscal Year 2012 Highlights and Recent
Events
- Net sales increased 6.9% year-over-year to $10.3 million
- Gross profit increased 16.4% year-over-year to $4.8 million, with gross margin of 46.6%
- Operating earnings rose 11.9% year-over-year to $2.7 million, with operating margin of 26.4%
- Net income increased 0.4% year-over-year to $1.8 million, or $0.04 per diluted share
- In June 2011, the Company filed
an application with the SEC to withdraw its registration statement
on Form S-1 for the proposed Taiwan Depositary Receipt offering and
withdraw its application for listing on the Taiwan Stock
Exchange
"Historically, we experience modest growth in net sales and
profitability in our first fiscal quarter as we primarily engage in
selling remaining inventory from the prior year production season.
At the end of the first quarter of fiscal 2012, we sold through
most of our inventory position. During the quarter, our newly
introduced seabuckthorn and blackcurrant glazed fruit products
continued to benefit from strong market demand and as a result, we
recorded a 6.9% year-over-year increase in net sales, demonstrating
our strong capability in diversifying our product portfolio,"
commented Mr. Yu Changjun, Chairman and CEO of China Nutrifruit.
"On the operational level, due to our continued efforts to
implement cost control measures, we recorded 3.8 percentage points
year-over-year growth in our gross margin. Due to our solid market
position, coupled with our product diversification and capacity
expansion initiatives, we expect to achieve strong revenue and net
income growth in fiscal year 2012," added Mr. Yu.
First Quarter Fiscal Year 2012 Results
Net sales for the first quarter of fiscal year 2012 increased
6.9% to $10.3 million, from
$9.6 million in the same quarter of
fiscal 2011. Sales growth during the quarter was primarily due to
increased sales volume of glazed fruit products. The Company's
recently introduced seabuckthorn and blackcurrant glazed fruit and
concentrate juice products accounted for approximately 19.1% of the
total sales during the quarter.
In the first quarter of fiscal year 2012, net sales from
concentrated juice products, which accounted for 50.5% of total net
sales, were $5.2 million, up slightly
from $5.0 million, or 52.3% of total
net sales, in the same quarter of fiscal year 2011. Net sales from
glazed fruit products reached $3.8
million, contributing 37.2% of net sales, up 119.2% as
compared to $1.7 million, or 18.2% of
total net sales in the same period of prior year. Sales of
concentrate pulp products were $1.0
million, or 9.7% of total net sales, down 56.5% compared to
$2.3 million in the same period in
fiscal year 2011. Net sales of concentrate pulp decreased as the
Company ceased cooperation with one of two OEM factories in this
quarter due to changes in the factory's business operations. In
fiscal year 2012, the Company made a strategic decision to replace
this relationship with another OEM concentrate pulp manufacturer
that consistently meets the Company's stringent quality
requirements. Sales from nectar were $0.3
million, or 2.6% of total net sales, down 52.3% from
$0.6 million, or 5.8% of total net
sales in the first quarter of fiscal 2011.
Gross profit for the first quarter of fiscal year 2012 increased
16.4% to $4.8 million from
$4.1 million for the same period a
year ago. Gross margin was 46.6% for the first quarter of fiscal
year 2012, up from 42.8% in the year ago period. The increase in
gross margin was mainly due to significant increase in sales volume
of higher margin glazed fruit products. Gross margin on glazed
fruit products rose to 54.9% from 49.8% a year ago. In contrast,
gross margin of concentrate pulp products, nectar and concentrate
juice were 23.6%, 67.3% and 43.8% compared to 25.5%, 69.3% and
45.3%, respectively, in the first quarter of fiscal year 2011.
In the first quarter of fiscal year 2012, selling, general, and
administrative expenses were $2.1
million, up 22.8% from the same period last fiscal year.
Selling expenses were $0.4 million,
or 4.0% of net sales, down 29.8% compared to $0.6 million, or 6.1% of net sales, in the first
quarter of fiscal year 2011. As a percentage of net sales, decline
in selling expenses was mainly due to the Company's well
established relationships with existing distributors who continued
to place repeat orders with higher volume, resulting in lower sales
related travel expenses.
General and administrative expenses were $1.7 million, or 16.2% of net sales, up 50.7%
from $1.1 million, or 11.5% of net
sales a year ago. The increase in general and administrative
expenses was mainly attributable to increase in professional
expenses related to the Company's proposed Taiwan Deposit Receipt
offering in Taiwan which was
withdrawn in June 2011. In addition,
the increase in payroll expenses also contributed to the increase
in general and administrative expenses for the quarter.
Operating earnings in the first quarter of fiscal year 2012 were
$2.7 million compared to $2.4 million in the comparable period last fiscal
year. Operating margin for the quarter improved to 26.4%, up from
25.2 % a year ago.
Provision for income taxes for the quarter was $0.9 million compared to $0.7 million a year ago. The Company's effective
tax rate was 33.9% for the first quarter fiscal year 2012 compared
to 27.1% for the same period last year.
Net income in the first quarter of fiscal year 2012 was
$1.8 million, or $0.04 per diluted share, up slightly compared to
the same period last fiscal year. The calculation of diluted
earnings per share for the first quarter of fiscal 2011 is based on
36.9 million weighted average shares outstanding compared to 36.7
million in the same quarter of fiscal 2011.
Financial Condition
As of June 30, 2011, China
Nutrifruit had $57.2 million in cash
and equivalents, $10.8 million in
current liabilities with no long-term debt and working capital of
$53.1 million. Shareholders' equity
was $96.4 million as of June 30, 2011, up from $93.3 million as of March
31, 2011.
The Company generated $11.5
million net cash from operating activities, compared to cash
used in operating activities of $5.8
million in the same period fiscal year 2011. The Company
used $0.6 million and $4.1 in prepayment for purchase of property and
equipment for the upgrade of glazed fruit and concentrate juice
production lines and the construction of the Company's new
concentrate paste facility in Zhaoyuan respectively, which is
scheduled to begin operations in late August
2011.
Subsequent Events
- On July 25, 2011, the Company
commenced the fiscal year 2012 production season.
- In July 2011, the Company
completed technological upgrades to glazed fruit production lines
in Daqing and completed installation of additional processing
equipment at concentrate juice production lines in Mudanjiang,
increasing annual concentrate juice production capacity by 50% to
reach 9,000 tons.
- In August 2011, the Company
relocated its headquarters to Daqing Hi-Tech Industrial Development
Zone, Daqing, Heilongjiang,
China.
Business Outlook
"We are pleased to begin fiscal year 2012 with a strong cash
flow position to support our production season and numerous new
product development and capacity expansion initiatives. During our
production season this year, we expect to introduce several new
products, including fruit and vegetable powder products,
concentrate paste products, golden berry dried fruits, and cherry
tomato glazed fruits products. In addition, with our recent
technological upgrades to our glazed fruit production lines in
Daqing and installation of additional processing equipment at
concentrate juice production lines in Mudanjiang, we have
successfully increased our annual concentrate juice production
capacity by 50% to reach 9,000 tons. We also expect to benefit from
increased operational efficiency following these upgrades," said
Mr. Yu. "As we are currently in the process of engaging another OEM
factory, a process that may take several months, we expect
concentrate pulp products to contribute less to our overall sales
for the time being."
"In light of these initiatives and updates, we remain confident
in our ability to achieve our financial guidance for fiscal year
2012, with revenue of approximately $110
million to $113 million and net income of approximately
$29 million to $30 million,"
concluded Mr. Yu.
Conference Call Information
Management will conduct a conference call at 9:00 a.m. Eastern Time on Monday, August 15, 2011, to discuss financial
results for the first quarter fiscal year 2012, ended June 30, 2011.
To participate in the conference call, please dial the following
number five to ten minutes prior to the scheduled conference call
time: (866) 759-2078. International callers should dial
+1-706-643-0585. The conference ID number for the call is
89319601.
If you are unable to participate in the call at this time, a
replay will be available for fourteen days starting from
Monday, August 15, 2011 at 12:00
noon Eastern Time. To access the
replay, dial 855-859-2056. International callers should dial
+1-404-537-3406. The conference ID number for the replay is
89319601.
About China Nutrifruit Group Limited
Through its subsidiaries Daqing Longheda Food Company Limited
and Daqing Senyang Fruit and Vegetable Food Technology Company
Limited, China Nutrifruit, is engaged in developing, processing,
marketing and distributing a variety of food products processed
primarily from premium specialty fruits grown in Northeast China, including golden berry, crab
apple, blueberry, seabuckthorn, blackcurrant and raspberry. Its
processing facility possesses ISO9001 and HACCP series
qualifications. Currently, the Company has established an extensive
nationwide sales and distribution network throughout 18 provinces
in China. For more information,
please visit http://www.chinanutrifruit.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act""). Such statements include, among
others, those concerning our expected financial performance in
fiscal year 2012, new products, our new facility, technical update
and capacity expansion, and its expected impact on the Company's
business and financial performance, our expectations regarding the
market for our existing products and new products, our expected
financial performance and strategic and operational plans, as well
as all assumptions, expectations, predictions, intentions or
beliefs about future events. You are cautioned that any such
forward-looking statements are not guarantees of future performance
and that a number of risks and uncertainties could cause actual
results of the Company to differ materially from those anticipated,
expressed or implied in the forward-looking statements. The words
"believe," "expect," "anticipate," "project," "targets,"
"optimistic," "intend," "aim," "will" or similar expressions are
intended to identify forward-looking statements. All statements
other than statements of historical fact are statements that could
be deemed forward-looking statements. Risks and uncertainties that
could cause actual results to differ materially from those
anticipated include risks related to new and existing products; any
projections of sales, earnings, revenue, margins or other financial
items; any statements of the plans, strategies and objectives of
management for future operations; any statements regarding future
economic conditions or performance; uncertainties related to
conducting business in China; any
statements of belief or intention; any of the factors mentioned in
the "Risk Factors" section of our Annual Report on Form 10-K for
the year ended March 31, 2011, and
other risks and uncertainties mentioned in our other reports filed
with the Securities and Exchange Commission. The Company assumes no
obligation and does not intend to update any forward-looking
statements, except as required by law.
Company Contact:
|
Investor Relations Contact:
|
|
Mr. Colman Cheng, Chief
Financial Officer
|
Mr. Crocker Coulson,
President
|
|
China Nutrifruit Group
Limited
|
CCG Investor
Relations
|
|
Tel:+ 852 9039
8111
|
Tel: +1-646-213-1915 (NY
office)
|
|
Email: zsj@chinanutrifruit.com
|
Email: crocker.coulson@ccgir.com
|
|
Website: www.chinanutrifruit.com
|
Website: www.ccgirasia.com
|
|
|
|
|
|
Linda Salo, Account
Manager
|
|
|
Email: linda.salo@ccgir.com
|
|
|
Tel: +1- 646-922-0894 (New York
office)
|
|
|
|
–Financial Tables Follow –
CHINA NUTRIFRUIT GROUP LIMITED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED)
(Stated in US
Dollars)
|
|
|
|
Three months ended
June 30,
|
|
|
|
|
2011
|
2010
|
|
|
|
|
|
|
|
Net sales
|
|
|
$ 10,293,165
|
$ 9,628,256
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
(5,498,693)
|
(5,509,124)
|
|
|
|
|
|
|
|
Gross profit
|
|
|
4,794,472
|
4,119,132
|
|
|
|
|
|
|
|
Selling expenses
|
|
|
(410,321)
|
(584,508)
|
|
General and administrative expenses
|
|
|
(1,665,890)
|
(1,105,724)
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
2,718,261
|
2,428,900
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
Interest expense
|
|
|
(56,175)
|
-
|
|
Other income
|
|
|
61,000
|
30,472
|
|
Total other income (expenses)
|
|
|
4,825
|
30,472
|
|
|
|
|
|
|
|
Earnings before income taxes
|
|
|
2,723,086
|
2,459,372
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
(922,521)
|
(665,866)
|
|
|
|
|
|
|
|
Net earnings
|
|
|
1,800,565
|
1,793,506
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
Foreign currency translation
|
|
|
1,351,305
|
(68,850)
|
|
Comprehensive income
|
|
|
$ 3,151,870
|
$ 1,724,656
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
Basic
|
|
|
$ 0.04
|
$ 0.04
|
|
|
|
|
|
|
|
Diluted
|
|
|
$ 0.04
|
$ 0.04
|
|
|
|
|
|
|
|
Weighted average number of common stock outstanding
|
|
|
|
|
|
Basic
|
|
|
36,915,762
|
36,670,809
|
|
|
|
|
|
|
|
Diluted
|
|
|
36,915,762
|
36,774,433
|
|
|
|
|
|
|
|
|
CHINA NUTRIFRUIT GROUP LIMITED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Stated in US
Dollars)
|
|
|
June 30,
|
|
March 31,
|
|
|
2011
|
|
2011
|
|
ASSETS
|
(unaudited)
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$ 57,203,552
|
|
$ 43,542,075
|
|
Trade receivables, net of allowance
|
4,935,306
|
|
12,476,652
|
|
Inventories, net
|
1,778,532
|
|
6,419,152
|
|
Prepayments and deposits
|
6,584
|
|
264,878
|
|
Other current assets
|
1,548
|
|
1,527
|
|
Total current assets
|
63,925,522
|
|
62,704,284
|
|
Property and equipment, net
|
20,074,827
|
|
20,312,005
|
|
Prepayments and deposits
|
14,788,791
|
|
10,983,404
|
|
Construction in progress
|
7,409,487
|
|
5,915,395
|
|
Deferred tax assets
|
868,538
|
|
909,879
|
|
Land use rights, net
|
189,222
|
|
188,199
|
|
Total assets
|
$ 107,256,387
|
|
$ 101,013,166
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Other payables and accrued expenses
|
$ 2,220,488
|
|
$ 3,312,525
|
|
Bank borrowings
|
7,739,938
|
|
-
|
|
Due to a director
|
-
|
|
946,550
|
|
Trade payables
|
3,406
|
|
130,276
|
|
Income taxes payable
|
868,501
|
|
3,351,631
|
|
Total current liabilities
|
10,832,333
|
|
7,740,982
|
|
TOTAL LIABILITIES
|
10,832,333
|
|
7,740,982
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
Preferred stock
|
|
|
|
|
Authorized: 5,000,000 shares, par value $0.001
|
|
|
|
|
Issued and outstanding: 330,860 shares as at June 30, 2011; (330,860
as at March 31, 2011)
|
331
|
|
331
|
|
Common stock
|
|
|
|
|
Authorized: 120,000,000 shares, par value $0.001
|
|
|
|
|
Issued and outstanding: 36,915,762 shares as at June 30, 2011; (36,915,762
shares as at March 31, 2011)
|
36,916
|
|
36,916
|
|
Additional paid-in-capital
|
36,492,566
|
|
36,492,566
|
|
Statutory reserves - restricted
|
6,850,422
|
|
6,850,422
|
|
Accumulated other comprehensive income
|
5,302,736
|
|
3,951,431
|
|
Retained earnings
|
47,741,083
|
|
45,940,518
|
|
TOTAL SHAREHOLDERS' EQUITY
|
96,424,054
|
|
93,272,184
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ 107,256,387
|
|
$ 101,013,166
|
|
|
|
|
|
CHINA NUTRIFRUIT GROUP LIMITED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in US
Dollars)
|
|
|
|
Three months ended
June 30,
|
|
|
|
|
2011
|
2010
|
|
Operating
activities:
|
|
|
|
|
|
Net earnings
|
|
|
$ 1,800,565
|
$ 1,793,506
|
|
Adjustments to
reconcile net earnings to net cash
used in
operating activities
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
733,152
|
428,358
|
|
Benefit for
deferred income taxes
|
|
|
41,341
|
39,027
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
|
Trade receivables,
net
|
|
|
7,679,698
|
3,972,796
|
|
Inventories
|
|
|
4,708,285
|
3,903,808
|
|
Prepayments and
deposits
|
|
|
258,522
|
(13,699,845)
|
|
Other current
assets
|
|
|
-
|
45,527
|
|
Trade
payables
|
|
|
(128,092)
|
(29,557)
|
|
Income taxes
payable
|
|
|
(1,122,369)
|
(1,795,453)
|
|
Other payables and
accrued expenses
|
|
|
(2,518,182)
|
(451,846)
|
|
Net cash provided by (used in)
operating activities
|
|
|
11,452,920
|
(5,793,679)
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
Prepayment for property and
equipment
|
|
|
(3,635,316)
|
-
|
|
Addition to construction in
progress
|
|
|
(1,405,063)
|
(3,503,536)
|
|
Net cash used in investing
activities
|
|
|
(5,040,379)
|
(3,503,536)
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
Proceeds from new bank
borrowings
|
|
|
7,704,160
|
-
|
|
Amount due to a
director
|
|
|
(955,316)
|
-
|
|
Net cash provided by financing
activities
|
|
|
6,748,844
|
-
|
|
|
|
|
|
|
|
Increase (decrease) in cash and
cash equivalents
|
|
|
13,161,385
|
(9,297,215)
|
|
|
|
|
|
|
|
Effect of exchange rate on cash
and cash equivalents
|
|
|
500,092
|
(36,254)
|
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of the period
|
|
|
43,542,075
|
35,994,443
|
|
|
|
|
|
|
|
Cash and cash equivalents at end
of the period
|
|
|
$ 57,203,552
|
$ 26,660,974
|
|
|
|
|
|
|
|
Supplemental disclosure of cash
flows information:
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
Income
taxes
|
|
|
$ 3,405,651
|
$ 2,422,292
|
|
Interest
|
|
|
$ 56,175
|
$ -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE China Nutrifruit Group Limited