Information contained on this page is provided by an independent third-party content provider. WorldNow and this Station make no warranties or representations in connection therewith. If you have any questions or comments about this page please contact email@example.com.
SOURCE Deyu Agriculture Corp.
BEIJING, May 13, 2014 /PRNewswire/- Deyu Agriculture Corp. (OTCBB: DEYU) (the "Company"), a Shanxi Province, China-based vertically integrated producer, processor, marketer and distributor of organic and other agricultural products made from corn and grains, today announced its financial results for the three months ended March 31, 2014.
First Quarter 2014 Results:
Net revenue was $15.6 million, as compared to $77.2 million in Q1 of 2013;
Gross loss was $5.3 million, as compared to gross profit $8.8 million in Q1 of 2013;
Gross margin was (34.1)%, as compared to 11.4% in Q1 of 2013;
Net loss available to common stockholders was $9.4 million, as compared to net income of $3.1 million in Q1 of 2013;
Loss per diluted share was $0.87 on 10.8 million shares, as compared to income per diluted share of $0.25 on 12.7 million shares in Q1 of 2013.
"Corn is mainly used as raw material for livestock feeds and deep processed products such as corn starch and ethanol. The demand for corn declined dramatically in 2013. The corn market experienced a downturn, a result of weak demand from the downstream industries with consecutive increases in output in the past few years in China," commented Mr. Hong Wang, Acting Chief Executive Officer. "The on-going downturn continued to impact our business in 2014. In the first quarter of 2014, the trend continued. Pork prices continued to decline and the demand of livestock feeds made of corn remained very weak. In addition, the deep processed corn industry has been depressed for a few years. Many deep processed corn companies have been running under production capacity and have not been profitable. Demand for corn in the deep processed corn industry continues to remain very low. The Company is now undertaking a conservative strategy in sales development as a temporary measure to cope with the weak demand in the market."
Financial Results for the Three Months Ended March 31, 2014
The Company's net revenue for 2014Q1 was $15.6 million, a decrease of $61.6 million, or 79.8%, compared to $77.2 million for2013Q1. This decrease was the combined result of a decrease of $27.1 million in corn sales, a decrease of $5.7 million in grain sales and a decrease of $28.8 million in bulk trading sales. Net revenue from our Corn Division for 2014Q1 was approximately $8.3 million, a decrease of $27.1 million, or approximately 76.5%, as compared to $35.4 million for 2013Q1. The decrease was mainly the combined result of a decrease of 42.8% in sales volume and a decrease of 58.9% in the average annual selling price of corn. The decrease was primarily due to a conservative strategy temporarily taken by the Company to cope with the weak demand in the corn market. Net revenue from our Grain Division for 2014Q1 was approximately $6.7 million, a decrease of $5.7 million, or 46.2%, as compared to $12.4 million for 2013Q1. The decrease was mainly attributable to the reduction in retail sales caused by the deteriorating efficiency of traditional retail sales. Net revenue from our Bulk Trading Division for 2014Q1 was approximately $0.6 million, a decrease of $28.8 million, or 98.0% as compared to $29.4 million for 2013Q1. This decrease was mainly attributable to a conservative strategy temporarily taken by the Company with its bulk trading business.
Gross loss for 2014Q1 was $5.3 million, as compared to gross profit of $8.8 million for 2013Q1. The decrease was a combined result of a decrease in gross profits of $10.5 million in the Corn Division, a decrease of $2.0 million in the Grain Division and a decrease of $1.6 million in the Bulk Trading Division. Our gross margin decreased from 11.4% for 2013Q1 to (34.1)% for 2014Q1. The decrease in gross margin was mainly attributable to the gross loss resulting from the sales of mildewed corn inventory to third parties at prices lower than the cost for 2014Q1. Gross margin for our Corn Division was (68.4)% for 2014Q1, compared with 13.5% for 2013Q1. The Company incurred gross loss of $5.9 million from the sales of the mildewed corn inventory to third parties at prices lower than the cost for 2014Q1. Taking out the impact of disposal of mildewed corn, gross profit and gross margin from the sales of normal corn was $0.2 million and 4.3%, respectively. Gross margin from the sales of normal corn decreased 938 basis points, which was primarily due to the weak demand from corn downstream industries. Gross margin for the Grain Division was 9.1% for 2014Q1, which decreased by 1190 basis points from 21.0% for 2013Q1. This decrease in gross margin was primarily due to the increasing cost of raw materials in addition to the reduction in grain retail sales with higher gross margin. Gross margin for the Bulk Trading Division was (33.9)% for 2014Q1, compared to 4.9% for 2013Q1. This decrease was mainly attributable to the market fluctuation in the first quarter of 2014.
Selling expenses for 2014Q1 were $1.1 million, decreased for $2.1 million, or 65.7% from the $3.2 million for 2013Q1. The decrease was mainly attributable to the decline of freight costs caused by the reduction in sales volume. General and administrative expenses for 2014Q1 were $2.7 million, an increase of $0.8 million or 42.2% compared to 2013Q1. This increase was primarily due to the increase of allowance for bad debts of account receivables.
As a result of the above, we had net loss available to common stockholders of $9.4 million for 2014Q1 compared to a net income of $3.1 million for 2013Q1.Loss per diluted share was $0.87 on 10.8 million shares, as compared to income per diluted share of $0.25 on 12.7 million shares in Q1 of 2013.
"Given that the decrease in demand of corn from downstream industries, another good corn harvest in 2013 and anticipated increases in corn imports with low prices, we expect the oversupply in the corn market will continue to impact our business in the coming months," said Mr. Wang. "The Company has been undertaking measures to optimize operations, to increase efficiency and to reduce operational costs. At the same time, the Company is continuing its business development initiatives. We expect these measures, together with new business development, will help us get through this difficult period and restore the growth in the future."
About Deyu Agriculture Corp.
Deyu Agriculture Corp. is a vertically integrated producer, processor, marketer and distributor of organic and other agricultural products made from corn and grains operating in Shanxi Province in the People's Republic of China. We have a nationwide sales network covering manufacturers, grain traders, wholesalers, distributors, institutional clients and retail stores in China. Deyu Agriculture Corp.'s facilities include sophisticated production lines and modern warehouses with a total production capacity of over 105,000 tons for grain products, storage capacity of over 100,000 tons and annual turnover of 700,000 tons for corn products. The Company's website is located at www.deyuagri.com.
Safe Harbor Statements
This press release contains forward-looking statements made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon the current plans, estimates and projections of Deyu Agriculture Corp.'s management and are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; uncertainties related to conducting business in China, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. Therefore, you should not place undue reliance on these forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China, general economic conditions; geopolitical events and regulatory changes, availability of capital, changes in the agricultural industry, the Company's ability to maintain its competitive position. Additional Information regarding risks can be found in the Company's quarterly and annual reports filed with the U.S. Securities and Exchange Commission at www.sec.gov.