Singapore, August 14, 2008 – Luzhou Bio-chem Technology Limited, one of the PRC's leading producers of corn sweeteners, today reported that the Group's net profit surged 138.5% to RMB15.1 million for the second quarter ended June 30, 2008 as compared to the previous corresponding period..
This was achieved on the back of a 38.2% increase in revenue to RMB736.0 million.
“We are pleased to report a better set of results this quarter, with stronger demand across all our product categories. With the commencement of our animal feed production lines in May 2008, we are optimistic that the contribution of this animal feed product will enhance our gross profit margins for this product segment.
“Meanwhile, we have seen a stabilisation of prices of our key raw material, corn, since January this year,” said Managing Director of Luzhou, Mr Niu Jixing .
Performance Review
The Group’s corn sweeteners product segment saw its revenue increase 11.1% to RMB436.9 million, contributing 59.4% of total revenue in 2QFY2008. Sales contribution from corn starch rose 97.9% to RMB74.4 million, accounting for 10.1% of
total revenue in 2QFY2008.
Revenue from by-products and others surged 121.3% to RMB224.7 million, making up the remaining 30.5% of 2QFY2008 revenue. In May 2008, the Group commenced production of animal feed products. With an annual production capacity of 180,000 tonnes, the new production line further processes by-products into animal feeds.
In 2QFY2008, the Group’s gross profit margin declined from 11.7% in 2QFY2007 to 10.0% in 2QFY2008, mainly due to higher corn prices.
Other operating income increased by 25.0% to RMB8.4 million in 2QFY2008, due mainly to an unrealised exchange gain from the Group’s US dollar interest-bearing loans and borrowings and an increase in government grants received. Selling and distribution expenses increased by 20.7% to RMB38.8 million in 2QFY2008, due to higher sales volume and transportation costs. During the quarter under review, the Group was able to maintain its administrative expenses despite the increase in the scale of operations due to the streamlining of its administrative functions.
As a result of its topline growth and efforts to maintain its administrative expenses, the Group registered a 138.5% jump in net profit to RMB15.1 million in 2QFY2008 as compared to 2QFY2007.
Outlook & Strategies
Mr Niu said, “The Group is currently on track to execute our capacity expansion and enhancement plans. The commencement of operations of our animal feed production facilities is expected to improve our gross margin for the by-product segment. We also expect to complete the installation of production lines for the production of higher value corn oil by the third quarter of 2008.
“Going forward, we intend to develop other downstream products. As part of the Group’s efforts to further enhance our range of higher value products, we have recently announced the establishment of a joint venture to engage in the production and sale of amino acids, the construction for which is scheduled to be completed in 2009.”
The Group is also on track to complete the installation of additional thermoelectricity generators at its Liaoning and Shaanxi plants. It completed the installation of a thermoelectricity generator at its Liaoning plant in the second quarter of 2008, and is targetting to complete installation works at its Shaanxi plant by end 2008.
About Luzhou Bio-chem
Established in 1988, Luzhou Bio-chem Technology Limited (“Luzhou”) is a leading corn refiner and one of the largest producers of corn sweeteners in the PRC. Luzhou currently operates six production facilities in the PRC, with a total production capacity of 990,000 tonnes per annum. Luzhou has two production facilities in Yishui, Shandong Province, and one each in Fushun, Liaoning Province, Xingping, Shaanxi Province, Xiping, Henan Province and Pengshan, Sichuan Province. Most of its facilities straddle key corn and agricultural producing provinces to cover most parts of the PRC market and are near sources of raw materials.