WEIFANG, Shandong, China, Sept. 28 /PRNewswire-Asia-FirstCall/ -- Shengtai Pharmaceutical, Inc. ("Shengtai Pharmaceutical" or "the Company"), a leading manufacturer and distributor of high-quality, pharmaceutical grade glucose products in China, today reported financial results for the fourth quarter and the fiscal year ended June 30, 2009.
"Fiscal year 2009 had been challenging. The world economic crisis had impacted our operation. Our cornstarch and its by products had generated lower sales volume and lower average selling prices ("ASP")," Mr. Qingtai Liu, Shengtai Pharmaceutical's CEO, said. "However, we are glad to see that our key business glucose had generated higher sales volume and higher sales revenue. We are also seeing market recovery for the cornstarch and its by products."
Mr. Liu continued, "As the economic environment is improving, we have initiated a series of measures to embrace coming opportunities. We will focus on gaining higher glucose market share, controlling cost, and putting more focus in developing higher value added corn starch based products."
Fiscal Fourth Quarter 2009 Financial Results
For the fiscal 2009 fourth quarter, sales revenue was $24.10 million, a 7% decrease as compared with $25.84 million for the same period in 2008.
Gross profit for the fourth quarter of fiscal 2009 was $1.32 million, a decrease of 75% as compared with $5.31 million in the same period in 2008. Gross margin was 5.5% for the 2009 fourth quarter as compared with 20.6% for the same period in 2008.
Operating loss for the fiscal 2009 fourth quarter was $1.58 million, a decrease of 152% as compared with $3.04 million operating income for the same quarter a year ago. The operating margin reached 6.56% in the fourth quarter of 2009 as compared to 11.8% for the same period in 2008.
Net loss was $2.16 million, a decrease of 169% as compared with net income of $3.14 million in the fourth quarter last year. The fully diluted loss per share were $ 0.11, a 171% decrease as compared to earnings per share $ 0.16 for the same quarter a year ago.
Fiscal Year 2009 Results
For the fiscal year 2009 ended June 30th, net revenues decreased 19% to $73.32 million from $90.87 million in fiscal year 2008. The decrease in sales was largely due to lower sales units and lower averaging selling prices of cornstarch and other products including fibers, dextrin, corn embryo, protein powders, and phytin. Glucose sales revenue increased slightly in FY09. Glucose products accounted for 50.31% of the total net revenues in FY09. Revenue from exports accounted for approximately 14% of total revenue in FY09.
Gross profit in fiscal year 2009 was $7.52 million, a decrease of 63% from $20.26 million a year ago. Gross profit margin was 10.3%, a decline from 22.3% for fiscal year 2008. The gross margin decline was mainly due to lower averaging selling prices ("ASP") and higher unit costs due to idle capacity.
Selling, general and administrative (SG&A) expenses for the fiscal year ended June 30, 2009 were $8.61 million, an increase of $1.22 million, or 16% compared with fiscal year 2008. The increase in our selling, general and administrative expenses was the result of the higher worker insurance requirements related expenditures. The increased expenses of expanding our sales network also contributed to the higher general and administrative expenses. In addition, the Company also recorded a non-cash stock option expense totaling $635,272 during FY2009.
Research and development expenses for the fiscal year ended June 30, 2009 were $0.37 million. We did not have such expenses in the year ended June 30, 2008. The expenses relate to our effort to develop high valued added products. Currently we have not successfully completed our development but we will focus on developing high value added products to increase our gross margin.
Operating income decreased 111% to $1.45 million from $12.87 million in the prior year.
The tax rate for Shengtai's China operations in FY09 was 12%, same as in the FY08. As a Sino-foreign joint venture, Shengtai Pharmaceutical enjoyed the 2 year tax holiday and 3 year 50% tax reduction. For FY09, Shengtai was in the fifth year of tax benefit program granted by the government. The prevailing corporate income tax rate in China is now 25%.
Net income decreased 126% to a loss of $2.66 million and fully diluted losses per share were $0.14, compared with net income of $10.41 million, or fully diluted earnings per share of $0.52 in fiscal year 2008. The weighted average number of shares on a fully diluted basis decreased by 4% to 19,139,394 shares in fiscal year 2009 versus 19,874,486 shares in fiscal year 2008.
Financial Condition
As of June 30, 2009, Shengtai Pharmaceutical had cash and restricted cash totaled $33.51 million. In fiscal year 2009, the Company used $1.29 million in cash flow for operations as compared to $5.50 million generated by the operations in the same period in FY08. DSO as of FY09 was 36 days as compared to 30 days for FY08. At June 30, 2009, the Company had short-term bank debt totaling $25.64 million and $5.65 million of long-term debt outstanding. The Company's total shareholders' equity decreased to $44.95 million from $46.76 million at June 30, 2008.
Business Outlook
Ms. Yiru Shi, Chief Financial Officer of Shengtai Pharmaceutical, commented, "In FY 2009, we have completed the vertical integration of our business and expanded our glucose production capacity. Our new glucose factory started operations. Our glucose business remained stable in the world economic crisis. We are not planning any in house projects in fiscal year 2010 that will require additional large capital expenditures. As a result, our day-to-day operating cash flows and liquidity positions should improve considerably."
"The China healthcare reform is designed to expand basic healthcare coverage to many people currently without healthcare. Increased government investment in building new hospitals and clinics should bring additional sales opportunities for our high-quality glucose products. In FY 2010, we will focus on capturing larger market share in the growing market for pharmaceutical grade glucose products in China. With the starting of our new glucose factory, we are very well positioned for our goal," stated Mr. Qingtai Liu, Shengtai Pharmaceutical's CEO. "At the same time, we will focus on improving our products structure by developing higher value added cornstarch based products to improve our competitive position and gross margin. We will also focus heavily on cost control to ensure our profitability. We believe these strategic steps will help us improve our business as we enter fiscal year 2010."
Conference Call
The Company will host a conference call and webcast on Tuesday September 29, 2009 at 9:00 A.M. Eastern Daylight Time / 9:00 P.M. Beijing Time. A question and answer session will follow management's presentation. Ms. Yiru Melody Shi (Chief Financial Officer), and Ms. Haining Michelle Wang (Investor Relations Manager) will be the primary speakers on the call.
To participate, please call the following numbers ten minutes before the call start time:
A replay of the call will be available through Tuesday, October 6, 2009, at 11:59 P.M. Eastern Daylight Time/ Wednesday, October 7, 2009, 11:59 A.M. Beijing Time. For the replay, please call:
About Shengtai Pharmaceutical, Inc.
Shengtai Pharmaceutical, Inc. through its wholly owned subsidiary, Shengtai Holding, Inc. (SHI), a New Jersey corporation, and the Chinese operating company of Weifang Shengtai Pharmaceutical Co., Ltd., is a leading manufacturer and supplier of pharmaceutical grade glucose used for medical purposes. It also manufactures and supplies glucose and cornstarch products to the food, beverage and industrial production industries in China. For more information about Shengtai Pharmaceutical, Inc., please visit http://www.shengtaipharmaceutical.com .
Forward Looking Statements
Certain statements in this press release and oral statements made by the Company constitute forward-looking statements concerning the Company's business and products. These statements include, without limitation, statements regarding our ability to prepare the Company for growth and predictions and guidance relating to the Company's future financial performance. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs, but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as unanticipated changes in product demand especially in the pharmaceutical industry, pricing and demand trends for the Company's products, changes to government regulations, risk associated with operation of the Company's new facilities, risk associated with large-scale implementation of the Company's business plan, the ability to attract new customers, ability to increase its product's applications, cost of raw materials, downturns in the Chinese economy, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. Investors are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.
SOURCE Shengtai Pharmaceutical, Inc.
CONTACT: Ms. Yiru Shi, Chief Financial Officer, +1-949-468-7078,
shengtaicfo@hotmail.com, or Haining Michelle Wang, Investor Relations
Manger, +86-536-629-5802, shengtaiir@hotmail.com, both of Shengtai
Pharmaceutical, Inc.
Web site: http://www.shengtaipharmaceutical.com/
