Feihe International, Inc. Reports Second Quarter 2012 Financial Results
(firmenpresse) - BEIJING and LOS ANGELES, CA -- (Marketwire) -- 08/09/12 -- Feihe International, Inc. (NYSE: ADY) ("Feihe International" or the "Company") one of the leading producers and distributors of premium infant formula, milk powder and soybean, rice and walnut products in China, today announced financial results for the second quarter of 2012. The Company will hold a conference call today at 8:00 am Eastern Time.
Revenue increased $0.5 million, or 0.8%, to $63.4 million in 2Q12 vs. $62.9 million in 2Q11:
Revenue from branded milk powder products was $60.7 million in 2Q12, up $6.6 million, or 12.2%, from $54.1 million in 2Q11, and up $1.3 million, or 2.2%, sequentially from $59.4 million in 1Q12
Revenue from raw milk powder was $30,000 in 2Q12, compared to $5.2 million in 2Q11 and $0.9 million in 1Q12
Gross profit increased $5.8 million, or 19.7%, to $35.3 million in 2Q12 vs. $29.5 million in 2Q11, and up $1.3 million, or 3.8%, sequentially from $34.0 million in 1Q12
Gross margin was 55.7% in 2Q12 vs. 47.0% in 2Q11, up from 54.0% in 1Q12
Net income attributable to the common shareholders of the Company increased $0.6 million, or 11.5%, to $5.8 million in 2Q12 vs. $5.2 million in 2Q11
Diluted net income from continuing operations per common share ("EPS") was $0.29 in 2Q11 vs. $0.25 in 2Q10.
Mr. Leng You Bin, the Company's Chairman and Chief Executive Officer, stated, "We are extremely pleased with our second quarter results. Our sales of branded milk powder products increased 12.2% compared to the previous quarter, and this continues to be an area of strategic focus for us. We will continue our efforts to expand our sales of higher margin products and strengthen our premium quality brand awareness, while improving the efficiency of our distribution network."
The Company's revenue of $63.4 million in the second quarter of 2012 represented an increase of $0.5 million, or 0.8% compared to the second quarter of 2011. This increase was primarily attributable to an increase in sales of milk powder of $6.6 million, offset by a decrease in sales of raw milk powder of approximately $5.2 million and a decrease in sales of soybean powder of approximately $1.1 million. The decrease in sales of raw milk powder reflects the Company's decision to decrease production of raw milk powder, which generated a negative margin in recent periods.
Gross profit was $35.3 million in the second quarter of 2012, up $5.8 million, or 19.7%, from $29.5 million in the second quarter of 2011, and up $1.3 million, or 3.8%, sequentially from $34.0 million in the first quarter of 2012. Gross margin for the second quarter of 2012 was 55.7%, compared to 47.0% in the second quarter of 2011 and 54.0% in the first quarter of 2012. The increase in gross profit and gross margin were primarily due to general increases in sales of high end milk powder and a decrease in the cost of raw milk powder.
Sales and marketing expenses increased approximately $5.1 million, or 25.6%, to $25.0 million in the second quarter of 2012 from $19.9 million in the second quarter of 2011. The increase was primarily due to an increase in advertisement fees of approximately $1.8 million and of marketing promotion of $5.3 million, offset in part by a decrease in other sales and marketing expenses of approximately $0.6 million. General and administrative expenses approximately increased $0.1 million, or 2.0%, to $5.1 million in the second quarter of 2012 from $5.0 million in the second quarter of 2011.
As a result of the foregoing, income from operations was approximately $5.2 million in the second quarter of 2012, representing a slight decrease of approximately $30,000 in the second quarter of 2011.
Net income attributable to common shareholders of the Company for the second quarter of 2012 was $5.8 million, or diluted EPS of $0.29, as compared to net income attributable to common shareholders of the Company of $5.2 million, or diluted EPS of $0.25, in the second quarter in 2011.
Revenue decreased $4.2 million, or 3.2%, to $126.3 million in the six months ended June 30, 2012 from $130.5 million in the same period of 2011. Contributions from milk powder products were approximately $120.1 million in the six months ended June 30, 2012, up approximately $18.1 million, or 17.7%, from $102.0 million in the same period of 2011. This decrease in revenue was mainly due to a decrease in sales of raw milk powder of approximately $20.4 million and a decrease in sales of soybean powder of approximately $2.6 million, offset by an increase in sales of milk powder of approximately $18.2 million and an increase in sales of other products of approximately $1.3 million. The decrease in sales primarily reflected our strategic efforts to improve the sales of our high margin infant formula milk powder, particularly our premium Feifan series and super premium AstroBaby series. Gross profit increased approximately $15.3 million, or 28.3%, to $69.3 million in the six months ended June 30, 2012 from $54.0 million in the same period of 2011, primarily attributable to an increase in sales of branded milk powder with a higher margin, a decrease in sales of raw milk powder with a lower margin, and decreased costs of raw milk powder to $1.2 million for the six months ended June 30, 2012 from $22.4 million in the same period of 2011. Gross margin increased from 41.3% for the six months ended June 30, 2011 to 54.9% for the six months ended June 30, 2012. Operating expenses increased by $7.9 million, or 17.0%, to $54.5 million in the six month period ended June 30, 2012 from $46.6 million in same period of 2011, primarily due to an $8.0 million, or 22.3%, increase in sales and marketing expenses. Income from operations increased approximately $4.7 million, or 46.1%, to $14.9 million in the six months ended June 30, 2012, compared to $10.2 million in the prior year period. Net income attributable to common shareholders of the Company for the first six months of 2012 was $14.1 million, or diluted EPS of $0.69, as compared to net income attributable to common shareholders of the Company of $9.9 million, or diluted EPS of $0.48, in the prior year period.
As of June 30, 2012, the Company had cash and cash equivalents of $2.6 million and a working capital of approximately $20.8 million, compared to a working capital deficiency of approximately $8.0 million as of December 31, 2011. The Company has significant cash commitments in the upcoming year, including maturity of short-term bank loans of $46.7 million and the current portion of long term bank loans of $5.9 million. However, the Company believes that will be able to refinance much of its short-term bank loans when they become due and intends to do so.
Mr. Liu Hua, the Company's Vice Chairman and Chief Financial Officer, stated, "We are pleased to report our second quarter 2012 financial results today. The Company's financial performance has significantly improved since last quarter in terms of total sales, gross profit, net income and EPS. We are very confident in our business and will continue focus on sales of premium products. We will maintain quality and safety first and look forward to bringing value to consumers and our shareholders."
The Company will hold a conference call on August 9, 2012 at 8:00 am Eastern Time to discuss its results. Listeners may access the call by dialing the following numbers:
United States toll free: 1-888-397-5362
Hong Kong toll free: 800-968-835
Northern China toll free: 10-800-712-0046
Southern China toll free: 10-800-120-0046
International: 1-719-325-2108
The replay will be accessible through August 16, 2012 by dialing the following numbers:
United States toll free: 1-877-870-5176
International: 1-858-384-5517
Password: 2996349
Feihe International, Inc. (NYSE: ADY) is one of the leading producers and distributors of premium infant formula, milk powder, and soybean, rice and walnut products in the People's Republic of China. Feihe International conducts operations in China through its wholly owned subsidiary, Feihe Dairy, and other subsidiaries. Founded in 1962, Feihe Dairy is headquartered in Beijing, China, and has processing and distribution facilities in Kedong, Qiqihaer, Gannan, Longjiang, Shanxi, and Langfang. Using proprietary processing techniques, Feihe International makes products that are specially formulated for particular ages, dietary needs and health concerns. Feihe International has over 200 company-owned milk collection stations, six production facilities with an aggregate milk powder production capacity of approximately 2,020 tons per day and an extensive distribution network that reaches over 80,000 retail outlets throughout China. For more information about Feihe International, Inc., please visit .
This document contains forward-looking information about the Company's operating results and business prospects that involve substantial risks and uncertainties. Statements that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These statements include, but are not limited to, statements about the Company's plans, objectives, expectations, strategies, intentions or other characterizations of future events or circumstances and are generally identified by the words "may," "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "targets," "could," "would," and similar expressions. Because these forward-looking statements are subject to a number of risks and uncertainties, the Company's actual results could differ materially from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the heading "Risk Factors" in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2011 and in other reports filed with the United States Securities and Exchange Commission and available at . The Company assumes no obligation to update any such forward-looking statements.
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86-10-8457-4688 x8810
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Datum: 09.08.2012 - 05:00 Uhr
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