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Hebei Lansheng Biotech Co., Ltd. ShangHai Yuelian Biotech Co., Ltd.

Migao recorded 50.7% increase in Q3qrcode

Feb. 20, 2012

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Feb. 20, 2012


Migao Corporation, a China-based leading specialty potash fertilizer producer, today reported financial results for the three and nine-month periods ended December 31, 2011.

For the third quarter ended December 31, 2011 Migao reported revenues increased by 50.7% to $97.4 million as compared to revenues of $64.6 million for the three-month period ended December 31, 2011. For the quarter, the Company reported net income of $3.8 million or $0.07 per basic share as compared to net income of $8.2 million or $0.16 per basic share for the same period one year ago. The increase in revenue for the quarter ended December 31, 2011 is mainly due to higher selling prices of potassium sulphate, potassium nitrate, and potassium chloride, as well as higher sales volumes of potassium sulphate, potassium nitrate, potassium chloride, and specialty compound fertilizers. The decrease in net earnings is due to increasing potash cost per tonne, higher direct sales of lower margin potassium chloride, as well as lower average selling price of hydrochloric acid. Net earnings were also impacted by start-up costs related to new project facilities.
 

Summary Financial Statements ($'000)
ended Dec. 31, 2011
Q3 2011
Q3 2010
change%
Sales
97,360
64,604
50.7
Gross Profit
15,704
16,556
-5.1
Gross Profit (% of revenue)
16.1%
25.6%
-
Net Income
3,838
8,188
-53.1
EBITDA
8,046
11,962
-32.7

"Global economic pressures remained a challenge to our bottom line, however we are encouraged by strong selling prices of our core fertilizer products," said Mr. Liu Guocai, CEO of Migao. "We remain committed to leveraging our strong reputation throughout China to grow our operations and provide the highest quality agriculture products."

For the nine months ended December 31, 2011 Migao reported revenues of $263.9 million as compared to revenues of $199.3 million for the nine-month period ended December 31, 2010. For the first three quarters of fiscal 2012, the Company reported net income of $17.6 million or $0.33 per basic share as compared to net income of $25.1 million or $0.48 per basic share for the same period one year ago.

Migao's gross profit margin decreased to 16.1% for the quarter from the previous quarter's gross margin of 21.4%. Gross margin for the quarter was negatively impacted primarily from ongoing depressed selling price for the hydrochloric acid, a high-volume co-product from the potassium sulphate production process. Similarly impacting gross margin was depressed selling prices of ammonium chloride, the co-product from the potassium nitrate production process. Gross margin for the Company's specialty compound fertilizers was within target at 17.3%. Selling prices for hydrochloric acid are impacted by global economic conditions, specifically related to the export of finished goods that consume hydrochloric acid as a raw material. Ammonium chloride pricing has improved subsequent to the end of the quarter are expected to remain at normal levels for the balance of the current quarter, improving overall gross margin.

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