WEIFANG, Shandong, China, Nov. 14, 2011 /PRNewswire-Asia-FirstCall/ -- Shengtai Pharmaceutical, Inc. (OTC Bulletin Board: SGTI) (''Shengtai’’ or ''the Company’’ or “we” or “us”), 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 first quarter of fiscal 2012 ended September 30, 2011.
“We are glad that our sales increased 15% during the last quarter ended September 30, 2011, compared to the same period last year. During the quarter ended September 30, 2011, we continued our strategy of locking in lower cost raw material.” Qingtai Liu, CEO of Shengtai Pharmaceutical, Inc. stated, “We put in more cash resources into advances for raw material purchases to lock in the increasing raw material cost. We put our view for the long term success of the business and we are on the right path toward improvement and success among competition.”
First Quarter Fiscal2012Result of Operations
Net sales for the three months ended September 30, 2011 were $40,055,448, an increase of $5,410,876, or 15.62%, compared with the same period in 2010. The increase in net sales primarily resulted from increased unit selling prices of our products. For the three months ended September 30, 2011 compared to the same period last year, the quantity of our glucose products sold decreased about 2.44%, while the average unit selling price of our glucose products increased about 18.86%. For the three months ended September 30, 2011 compared to the same period last year, the quantity of our cornstarch products sold decreased about 8.14%, while the average unit selling price of our cornstarch products increased about 11.72%. For the three months ended September 30, 2011 compared to the same period last year, the quantity of our other products sold decreased about 2.66%, while the average unit selling price of our other products increased about 21.67%. The increased unit selling prices are caused by the increased raw material cost during the quarter ended September 30, 2011 compared to the same period last year. The sales quantity was affected because the Company tried to maintain a certain gross profit while the corn prices increased.
Net sales from exports for the three months ended September 30, 2011 increased approximately 26.80% compared with the same period in 2010. The increase is mainly attributable to the increased unit sales prices due to increased corn prices for the three months ended September 30, 2011 compared to the same period last year.
Cost of sales for the three months ended September 30, 2011 was $36,670,401, an increase of $8,045,186, or 28.11%, compared with the same period in 2010. The increase in cost of sales was mainly due to increase in the price of corn, our main raw material.
Gross profit for the three months ended September 30, 2011 was $3,385,047, a decrease of $2,634,310, or 43.76%, compared with the same period in 2010. The decrease of gross profit is mainly because unit selling prices of our products did not increase as fast as the corn prices. Gross profit margin for the three months ended September 30, 2011 was 8.45%, a decrease from 17.37% for the same period in 2010. The reason for the decrease of gross profit margin is mainly because the price of corn, our main raw material, increased approximately 21.62% for the three months ended September 30, 2011 compared to the same period last year where the average selling prices did not increase much. The Company believes that the market is taking its time to respond to the increased corn prices and will reach a more profitable price level in the near future. At the same time, the Company believes that the Company’s actions to improve gross profit margin, such as expanding raw material storage facilities to reduce the impact of fluctuation on the price of our raw materials, will benefit us in maintaining our profitability.
For the three months ended September 30, 2011, selling, general and administrative expenses were $2,152,615, a decrease of $427,189, or 16.56%, compared to $2,579,804 for the three months ended September 30, 2010. The selling, general, and administrative expenses remain stable as selling expenses increased due to increased sales while general and administrative expenses decreased mainly due to decreased bad debt allowance as a result of better collections this quarter. The Company incurred $6,900 and $100,176 non-cash stock option expenses for the three months ended September 30, 2011 and 2010, respectively. The option expenses are included in selling, general and administrative expenses.
Net income for the three months ended September 30, 2011 was $883,557, a decrease of $759,527 compared with $1,643,084 for the same period in 2010. The decrease in net income was primarily attributable to the decreased gross profit.
Financial Condition
As of September 30, 2011, Shengtai Pharmaceutical, Inc. had cash and restricted cash totaling $12.68 million. The Company’s short-term loan totaled $63.48 million and long-term debt totaled $0 million. The Company’s total shareholders’ equity increased to $60.99 million.
Management Comments
Looking forward, Qingtai Liu, CEO of Shengtai Pharmaceutical, Inc. stated, “Even though during the last quarter, the increased corn prices shrank the gross margin for the industry, we still view it as an opportunity for us. Compared to smaller companies, we had more cash to support us in a less profitable market for a longer time. We had stored larger raw material inventory and advanced more cash for raw material purchases. This will allow us to have a better margin than the competitors.”
“Going forward we are confident to be the final winner of the industry!” 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.
Forward Looking Statements
