| By Shengtai Pharmaceutical |
| Monday, 16 February 2009 |
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Shengtai Pharmaceutical, Inc. a leading manufacturer and distributor of high-quality, pharmaceutical grade glucose products in China, today reported financial results for the
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the second quarter of fiscal 2009 ended December 31, 2008. "Sales of our glucose products increased during the second quarter compared with the September quarter," said Mr. Qingtai Liu, Shengtai Pharmaceutical's CEO. "Sales of our cornstarch and other products were impacted in the second quarter due to lower demand from the food and beverage sector along with slower economic growth. We believe that the solid demand for glucose products and the increased healthcare spending included in the Chinese government's recently approved 850 billion RMB healthcare reform plan, will propel the continued growth of our domestic glucose business.
With the growth of our higher-margin glucose business, we look to consume more cornstarch internally to feed our glucose production, as our cornstarch plant directly connects into our glucose plant through pipes, eliminating shipping, lowering manufacturing costs and ensuring quality. Furthermore, we are pleased to see the declining corn prices in recent months, which will help improve our margins."
"On the sales front, our sales team is aggressively seeking new strategic partnerships, both domestically and internationally, to increase our market share and expand sales channels. In the midst of healthcare reform including new hospital build-out and increased healthcare budgets, many of our key customers are actively launching new products including higher margin non-PVC soft packaging transfusion products.
We continue to engage with our current customers in an effort to increase their purchase volumes, as we seek to better understand their |
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current procurement needs and new product development plans. With our new state-of-the-art glucose facilities, we now have the production capacity to meet the anticipated increase in glucose demand. We believe that we are well positioned to benefit from the fast growing healthcare spending in China ," Mr. Liu concluded.
Second Quarter Fiscal 2009 Financial Results
Second quarter 2009 revenues were $14.80 million, as compared to $24.95 million reported in the second quarter of fiscal 2008. Sales of glucose products rose to $9.25 million during the second quarter, representing 62.5% of revenues and 12.7% quarter-over-quarter growth. Cornstarch sales for the quarter totaled $2.03 million or 13.7% of revenues. Sales of other products totaled $3.52 million, or 23.8% of revenues.
Gross profit for the three months ended December 31, 2008, was $1.99 million compared with $5.87 million in the same period last year. Gross margin for the quarter was 13.5%, as compared with 23.5% in the second quarter of fiscal 2008 primarily due to lower overall sales, reduced cornstarch and other products production, and higher depreciation costs from our new production facilities.
Selling, general and administrative (SG&A) expenses were $2.32 million, an increase of $508,509 compared with the second quarter last year. The increase in SG&A expenses was mainly the result of higher labor costs. Non-cash stock option expenses for the quarter were $158,818.Operating income for the quarter was a loss of $328,730.Net loss for the second quarter 2009 was $473,887 compared with net income of $3.13 million for the year-ago same quarter.
Financial Condition
As of December 31, 2008, the Company's cash and cash
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equivalents and restricted cash increased to $13.2 million. The Company's total shareholders' equity amounted to $47.52 million.
Business Outlook
"For the 2009 third quarter, we expect sales of our pharmaceutical grade glucose will continue to grow and cornstarch and other products should begin to show a recovery," stated Mr. Qingtai Liu, Shengtai Pharmaceutical's CEO. "As we look further into the second half of our fiscal year 2009, we expect our domestic glucose business will further benefit as the government builds more rural hospitals and community health clinics as part of the 850 billion RMB health care reform package.
As more patients receive basic health coverage, we believe there will be increased demand for our glucose as medical transfusions are the most common form of medical treatment in China. We continue to execute our plan to optimize our product portfolio by expanding our glucose business, which carries a higher gross margin than our cornstarch business.
As an industry leader in the production of pharmaceutical grade glucose with about 40% of China's glucose market share, as well as being one of only three certified Dextrose Monohydrate manufacturer in China, we are confident in our long-term growth opportunities, and in our ability to succeed as a leading supplier of high-quality, pharmaceutical grade glucose products," Mr. Liu concluded.
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