Trading Statement
October 28 2008 - 10:22AM
UK Regulatory
China Biodiesel International Holding Co., Ltd. ("CBI" or the "Company")
Trading Statement
The Company is today issuing an update on trading for the year ending 31 December 2008.
The selling prices of fossil oil and vegetable oil have been negatively affected in recent months
by volatile markets, with falls of over 50% in the past three months linked to the international
financial crisis and the perceived growth prospects of the Chinese and global economies. This has
led to a reduction in the average selling price of the Company's products.
The fall in the average selling price of the Company's products has had a direct impact on the
gross margins being achieved due to the Company's level of carried inventory and previously
contracted supplies of vegetable oil feedstock. Further, price volatility has led to a reduced
level of customer orders as uncertainty around pricing continues.
Due to this volatility and taking account of continuing market uncertainties, the Company has
started to substantially reduce its volumes of procurement and production. The board believes this
action is in the Company's best interests during this period of market volatility in order to
reduce financial risk. Gross margins are expected to remain positive due to the Company's strategy
of focusing on higher margin B1 and B2 biodiesel used as chemical feedstock, overall the financial
effect of this action is that the Board expects the operating business of the Company to be loss
making for the second half of the financial year. Any profit on a group level for the full
financial year is anticipated to be linked to the receipt of government subsidies.
It is anticipated that when normal market conditions return, production volumes will exceed
historical levels as commissioning of the Company's new Xiamen plant is completed, as reported in
our interim statement. Furthermore, as raw material prices have fallen sharply, the board expects
gross margins to increase during 2009 once current inventories are exhausted.
While it remains uncertain when market pricing may return to normal patterns, the Company will
keep shareholders updated on developments as and when appropriate.
For further information:
Gloria He, CFO: +86 (592) 7191103
James Wang, Company Secretary: +86 (592) 7191109
Allan Piper or Lei Jiang
First City (China) Ltd: +44 (0) 207 242 2666/ +852 2854 2666
Tom Price or Bobbie Hilliam
Evolution Securities: +44 (0) 20 7071 4300
China Biodiesel International Holding Co LTD
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