Shengtai Pharmaceutical’s second quarter profit rises 68% despite higher corn prices
Shengtai Pharmaceutical (OTC:SGTI), a maker of pharmaceutical grade glucose in China, said on Monday after market close that its second quarter profits rose roughly 69% on higher product demand and price increases.
Second quarter net income rose to $2.7 million from $1.6 million as sales climbed. Sales surged 72% to $49 million from $28.5 million.
During the period, the company sold 21% more glucose products and almost twice the amount of cornstarch products compared to the second quarter of fiscal 2010. The prices for the products were higher by about 19% and 13%, respectively.
Gross margins fell to 12% from 15.7% in the year-ago period as the price for corn, the company's main input material, rose 12% during the period.
In the last six months, corn prices have already doubled. It reached $7 a bushel last Wednesday after the U.S.
Department of Agriculture said U.S. corn reserves of dropped to its lowest level in more than 15 years.
At quarter end, the company had about $ 6.8 million in cash and cash equivalents.
Looking ahead, the company said it expects its sales to grow both domestically and internationally but did not give a numerical estimate.
The company also expects its newly expanded cornstarch manufacturing facility will be used at 50% of capacity by the end of fiscal year.
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