Asia Bio-Chem achieves 144% Q2 revenue growth as new Daqing plant improves capacity
Chinese cornstarch manufacturer Asia Bio-Chem Group Corp. (TSXV: ABC) has achieved revenue growth of a whopping 144% for the second quarter of this year compared to the prior year quarter, reaching $56.9 million , largely a result of improved capacity due to the company`s new Daqing facility. Net income increased by $4.0 million in the second quarter of 2010 to $4.5 million compared with the same period in 2009.
"We are pleased to report that our new Daqing facility is running smoothly and contributing to earnings," said president and CEO Mr. Zhiping Wang.
"With Daqing up and running, we will use this opportunity to upgrade the Changtu facility to improve cost efficiency through a reduction in energy comsumption and discharge. These improvements will position our company to win business with the largest players in the global market," he added.
The average production capacity at the Daqing plant during the second quarter was 79%, bringing the company's combined capacity utilization to 84% during the quarter.
The addition of the Daqing plant coupled with continued improvement in product pricing contributed to a 279% increase in EBITDA at $7.6 million before stock-based compensation during Q2 2010 - the highest in the company's history and a 40% improvement over the first quarter, it said.
The company has also announced that beginning this month, it will begin the first phase of work on the Changtu Bio Chemical Industrial Park project in cooperation with the Changtu county government. Upon completion, the project will include a total of 900,000 tonnes of corn processing, representing 600,000 tonnes of net new corn processing capacity.
The initial phase of this project will involve the upgrade and relocation of the Changtu facility and is expected to be completed by mid-November.
In addition, the cornstarch business expects to complete the expansion of its loading system at the Daqing plant to accomodate bi-modal container cars before the end of October. This expansion is expected to increase throughput at the dock and therefore allow the plant to run at a higher capacity, the company said.
As at 30 June 2010, the company had $7.3 million in cash and $52.4 million in government and bank debt. Earnings per share on a basic and diluted basis were $0.06 for the period, versus $0.01 in Q2 2009.
Asia Bio-Chem manufactures cornstarch and related by-products. From its plants in Liaoning and Heilongjiang Province, the company has a total processing capacity of 900,000 tonnes of corn. Its products include cornstarch, corn germ, gluten and fiber which are sold into the domestic Chinese market.
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