HARBIN, China, June 20, 2012 /PRNewswire-Asia/ -- China Botanic Pharmaceutical Inc. (NYSE AMEX: CBP) ("China Botanic" or the "Company"), a developer, manufacturer and distributor of botanical products, bio-pharmaceuticals and Traditional Chinese Medicines ("TCM") in China, today announced financial results for the three months ended April 30, 2012.
Second Quarter Fiscal 2012 Highlights
- Net sales increased 22.0% year over year to $23.0 million
- Gross profit increased 13.4% year over year to $12.6 million with gross margin of 54.9%
- Net income rose 10.9% to $7.9 million, or $0.21 per diluted share, from $7.1 million, or $0.19 per diluted share, in the second quarter of fiscal 2011
Six Months Fiscal 2012 Highlights
- Net sales increased 23.3% year over year to $51.2 million
- Gross profit increased 20.0% year over year to $30.0 million with gross margin of 58.5%
- Net income rose 11.8% to $20.2 million, or $0.54 per diluted share, from $18.0 million, or $0.48 per diluted share, in the second quarter of fiscal 2011
Second Quarter Fiscal Year 2012 Results
During the three months ended April 30, 2012, net revenue increased by 22.0% to $23.0 million from $18.9 million in the same period of 2011. Revenue growth during the quarter was mainly due to increasing market acceptance of the Company's Siberian Ginseng Series products, Compound Honeysuckle Granules and increasing revenue contribution from its new Ginseng and Venison Extract product. Sales volumes increased during the second fiscal quarter of 2012 following a period of flat sales resulting from price increases in January 2011. The Company expects further sales volume growth in the remaining quarters of 2012.
Gross profit increased 13.4% to $12.6 million compared to $11.1 million in the second quarter of fiscal 2011. Gross margin decreased to 54.9% as compared to 59.0% in the same period last year. The decline in gross margin for the three months ended April 30, 2012 was primarily due to city construction tax and additional training incurred and recognized in this period, coupled with increasing raw material costs driven by rising inflation in China. The Company anticipates the cost of raw materials and other production costs will continue to increase in 2012 due to inflation.
Operating expenses for the three months ended April 30, 2012 were $3.4 million, as compared to $3.1 million in the same period last year.
Sales and marketing expenses rose 18.4% to $1.8 million from $1.5 million a year ago, reflecting the Company's investment in advertising activities during the quarter to enhance market recognition of the Company's botanic anti-depression series products. General and administrative expenses decreased 5.0% to $0.8 million from $0.9 million in the year-ago period. Research and development expenses were approximately $0.8 million, up 10.2% from approximately $0.7 million in the year ago period.
Operating income increased 14.6% to $9.2 million, compared to $8.0 million in the second quarter of fiscal 2011. Operating margin decreased year-over-year to 40.0% from 42.5%.
The Company incurred income tax expenses of $1.4 million in the second quarter of fiscal 2012, compared to $1.0 million for the comparable period in 2011 due to the 15% tax rate imposed effective January 1, 2011.
Net income increased 10.9% year over year to $7.9 million, or $0.21 per diluted share, from $7.1 million, or $0.19 per diluted share for the same period a year ago.
Six Months Fiscal 2012Results
For the six months ended April 30, 2012, total net revenue was $51.2 million, an increase of 23.3% from $41.5 million from the same period of fiscal year 2011. Gross profit in the six months ended April 30, 2012 rose 20.0% year over year to $30.0 million, representing a gross margin of 58.5% as compared to 60.1% in the year-ago period. Operating income grew 20.2% year-over-year to $23.7 million. In the six months ended April 30, 2012, net income was $20.2 million or $0.54 per diluted share, up from $18.0 million or $0.48 per diluted share in the six months ended April 30, 2011.
As of April 30, 2012, China Botanic had cash of approximately $32.1 million and total current assets of approximately $73.7 million. The Company had working capital of approximately $64.9 million on April 30, 2012, as compared to $40.8 million at the fiscal year end of October 31, 2011. The Company had no long-term debt on its balance sheet at the end of April 30, 2012. Shareholders' equity stood at $120.5 million, compared to $99.7 million as of October 31, 2011. Net cash flow from operating activities for the six months ended April 30, 2012 was $14.2 million compared to $16.1 million for the same period of 2011.
The Company has capital commitments of approximately $36.5 million to be paid by the end of 2013 for its Ah City Phase Two expansion, final payments for the purchase of patents, acquisition of exclusive rights to Siberian Ginseng growing properties and other real estate.
For fiscal year 2012, China Botanic reaffirms its guidance of revenues of between $91.6 million and $93.1 million, representing an increase of 26% to 28% over fiscal year 2011 revenue of $72.7 million. Revenue growth is expected to be driven largely by sales volume increases from the existing product portfolio. The Company expects net income to be in the range of $32.7 million to $33.2 million, representing an increase of between 26% and 28% over fiscal year 2011 net income of $25.9 million.
"We reported strong financial performance in the first half of fiscal 2012 and hold a positive outlook for the coming quarters. Our advertisement and promotion efforts have resulted in increased sales volume this quarter and we believe this is a good sign of our future organic growth. We are currently operating at approximately 75% capacity and are looking forward to expanding capacity in 2014 with the completion of our Ah City Phase Two expansion," said Mr. Shaoming Li, Chairman and Chief Executive Officer of China Botanic.
"Additionally, following the purchase of the five patents in 2011, our team is planning to develop new products for conditions like Parkinson's and others. We believe these new products will contribute to our longer term growth supported by capacity expansion at Ah City and our advertising efforts. In the near term, we expect to see continued strong demand for our Siberian Ginseng and other products as we gain increasing market recognition and improve our market penetration."
The Company will host a conference call at 9:00 a.m. Eastern Time on Wednesday, June 20, 2012, to discuss financial results for the second quarter of fiscal year 2012 ended April 30, 2012.
To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 866-394-2209. International callers should dial 706-758-1481. The conference ID number for the call is 91808849.
If you are unable to participate in the call at this time, a replay will be available on Wednesday, June 20, 2012 at 12:00 noon Eastern Time, through Wednesday, July 4, 2012. To access the replay, dial 855-859-2056. International callers should dial 404-537-3406. The conference ID number for the replay is 91808849.
ABOUT CHINA BOTANIC PHARMACEUTICAL INC.
China Botanic Pharmaceutical Inc. is engaged in the research, development, manufacturing, and distribution of botanical products, bio-pharmaceutical products, and traditional Chinese medicines ("TCM"), in the People's Republic of China. All of the Company's products are produced at its three GMP-certified production facilities in Ah City, Dongfanghong and Qingyang. The Company distributes its botanical anti-depression and nerve-regulation products, biopharmaceutical products, and botanical antibiotic and OTC TCMs through its network of over 3,000 distributors and over 70 sales centers across 24 provinces in China. For more information, please visit www.renhuang.com.
Safe Harbor Statement
This press release contains certain statements that may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon management's beliefs, assumptions and expectations of the Company's future operations and financial performance, taking into account the information currently available to management. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties, some of which are not currently known that may cause actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial condition expressed or implied in any forward-looking statements. These forward-looking statements are based on current plans and expectations and are subject to a number of uncertainties including, but not limited to, the Company's ability to manage expansion of its operations effectively, and other factors detailed in the Company's annual report on Form 10-K and other filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented herein.
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CHINA BOTANIC PHARMACEUTICAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
April 30, 2012
October 31, 2011
Trade receivables, net
Other receivables, net
Total current assets
Property and equipment, net