Shengtai Pharmaceutical, Inc. Reports Financial Results for the Fiscal Year 2012
WEIFANG, Shandong, China, Sept. 28, 2012 /PRNewswire/ -- Shengtai Pharmaceutical, Inc. (OTC Bulletin Board: SGTI) (''Shengtai'' or ''the Company'' or "We" or "Us" or "Our"), a manufacturer and distributor in China of glucose and starch as pharmaceutical raw materials and other starch and glucose products, today reported financial results for the twelve months ended June 30, 2012.
"We are very glad that the Company has made some important improvements in the year ended June 30, 2012," stated Qingtai Liu, CEO of Shengtai Pharmaceutical, Inc., "The Company developed a new product, corn germ meal, which can be used as animal feed. It immediately contributed to our product revenues. Other than maintaining our current domestic customers, we also developed new customers during the year ended June 30, 2012. Even though raw material costs increased, we still managed to maintain a strong market share in the domestic pharmaceutical glucose market in China."
Fiscal Year 2012 Result of Operations
Sales revenue for the fiscal year ended June 30, 2012 was $179,029,127, an increase of $7,311,260, or 4.26% compared with $171,717,866 in the corresponding period in 2011. The increase in sales revenue resulted from an increase in the average selling prices, offset by decreased sales quantity of corn starch products. The Company's average selling prices increased 3.87% for glucose products, 5.42% for cornstarch products, and 2.52% for other products, in the year ended June 30, 2012 compared to the year ended June 30, 2011. The Company's sales quantity increased by 1.48% for glucose products, decreased by 17.87% for cornstarch products, and increased by 6.29% for other products, for the year ended June 30, 2012 compared to the year ended June 30, 2011. Net sales quantities from exports for the year ended June 30, 2012 decreased approximately 1.69 %, or 1,395 tons compared to the year ended June 30, 2011. The decrease is mainly attributable to decreased sales of glucose products and cornstarch products, offset by increased exporting sales quantities of other products. The decrease in export sales quantity of glucose products is due to a decrease in demand resulting from a price decrease in sugar substitute products in the global market. The decreased export sales quantity of corn starch products is due to increased competition in the global cornstarch market. The increase in export sales of other products is due to increased orders from our regular customers and increased sales from our other newly developed products, including corn germ meal, which can be used as animal food. Domestic sales quantity for the year ended June 30, 2012 decreased by approximately 4.83% compared to the year ended June 30, 2011. The decrease was mainly attributable to increased domestic sales quantity of our glucose products, offset by decreased domestic sales quantity of cornstarch products and other products. The increase in domestic sales quantity of our glucose products is due to increased sales from new customers. The decrease in sales quantity of our cornstarch products and other products is due to increased competition.
Costs of sales for the year ended June 30, 2012 was $161,705,181, an increase of $13,111,135, or 8.82% as compared to $148,594,046 in the corresponding period in 2011. The increase of cost of sales is mainly due to an increase in corn prices. Gross profit for the year ended June 30, 2012 was $17,323,946, a decrease of $5,799,874, or 25.08%, as compared to $23,123,820 for the year ended June 30, 2011. Gross profit margin for the year ended June 30, 2012 was 9.68%, a decrease from 13.47% for the year ended June 30, 2011. The decrease in gross profit margin is because the percentage increase in the cost of sales is greater than the percentage increase in net sales.
Selling, general and administrative expenses were $11,825,104 for the year ended June 30, 2012, an increase of $2,020,060 or 20.6%, as compared to $9,805,044 for the year ended June 30, 2011. The increase of selling, general, and administrative expenses is caused by increased selling, general and administrative expenses in the PRC, offset by decreased selling, general and administrative expenses in the United States. The Company's selling, general and administrative expenses in the United States in the year ended June 30, 2012 decreased by $389,447 compared to the year ended June 30, 2011. The decrease is mainly due to decreased salary expenses of $364,000 and decreased option expenses of $211,082 offset by increased taxation expense expenses of $46,088. The salary expenses from the US entity decreased because during the year ended June 30, 2012 the Company's CEO agreed to give up his accrued salaries of $210,000 since April 2010 and the Company's CFO agreed to give up his accrued salaries of $154,000 since March 2010. The total accrued salary expense of $364,000 was reversed by increasing additional paid in capital in the year ended June 30, 2012. The Company incurred non-cash stock option expenses of $27,602 and $238,684 for the year ended June 30, 2012 and 2011, respectively. The selling, general and administrative expenses from our PRC operating entities increased by $2,020,060 for the year ended June 30, 2012 compared to the year ended June 30, 2011. The selling expenses from our PRC operating entities increased by $1,451,470 in the year ended June 30, 2012 compared to the same period in 2011. The increase in selling expenses is mainly attributable to the increase in shipping and handling expenses of $1,455,994 as a result of increased gas cost. The general and administrative expenses incurred in PRC increased $568,590 in the year ended June 30, 2012 compared to the year ended June 30, 2011. The increase is mainly attributable to the increase in depreciation expenses of $183,051 and workers' insurance expenses of $108,654.
Net income for the year ended June 30, 2012 was $1,072,594, a decrease of $6,578,457 or 85.98%, as compared to net income of $7,651,051 for the same period in 2011. The decrease in net income was primarily due to the decrease in gross profit, increase in selling and general and administrative expenses, and increase in interest expenses.
Net cash used in operating activities for the fiscal year ended June 30, 2012 was $23,737,700, a decrease of $28,807,300 or 568.24%, compared to $5,069,599 net cash provided by operating activities for the fiscal year ended June 30, 2011. The decrease is due to decreased net income, increased accounts receivables, increased payments to acquire inventories, increased payments to pay back accounts payables, and decreased customer deposit, offset by decreased other receivable, decreased prepayments and other assets, and increased deprecation during the year ended June 30, 2012 as compared to the year ended June 30, 2011.
Net cash used in investing activities for fiscal year ended June 30, 2012 was $1,655,433, a decrease of $6,442,584 or 79.56%, compared to $8,098,017 used in investing activities for the year ended June 30, 2011. The decrease is due to reduced investment in construction in progress during the year ended June 30, 2012 compared to the year ended June 30, 2011.
Net cash provided by financing activities for the fiscal year ended June 30, 2012 was $26,099,389, a decrease of $26,283,774 or 14,254.82%, as compared to $184,385 used in financing activities for the same period in 2011. The decrease is mainly due to increased short term bank loans, increased notes payables, less payments of notes payable, offset by increased restricted cash, more payments of short term bank loans, and less payment of capital lease during the year ended June 30, 2012 compared to the year ended June 30, 2011.
Management Comments
Looking forward, Qingtai Liu, CEO of Shengtai Pharmaceutical, Inc. stated, "Raw material costs show no sign of decline in the near future, so the Company will focus on other strategies to increase gross profit, including developing new product lines, keeping storage of raw materials to lock in lower cost, and sticking to a strict and more profitable pricing policy."
"We believe that our sound reputation, good quality products, and outstanding customer service will help us to maintain our market share and profits in the coming years," concluded Mr. Liu.
About Shengtai Pharmaceutical, Inc.
Shengtai Pharmaceutical, Inc. through its wholly owned subsidiary, Shengtai Holding, Inc. (SHI), and the Chinese operating company of Weifang Shengtai Pharmaceutical Co., Ltd., is a manufacturer and distributor in china of glucose and starch products as pharmaceutical raw materials, other starch products and other glucose products such as corn meals, food and beverage glucose and dextrin. For more information about Shengtai Pharmaceutical, Inc., please visit http://www.shengtaipharmaceutical.com.