EDITOR: | February 15th, 2013

Migao Reports Fiscal 2013 Third Quarter Financial Results

| February 15, 2013 | No Comments

February 15, 2013 (Source: Marketwire) Toronto, ON — Migao Corporation (TSX:MGO), a China-based specialty potash fertilizer producer, today reported financial results for the three and nine-month periods ended December 31, 2012.

Revenues for the third quarter were $60.4 million for third quarter of fiscal 2013, representing a decrease from the same period one year ago, however it is a dramatic increase compared to the recent second quarter revenues of $11.7 million. For the quarter, the Company reported a net loss of $4.5 million or $0.09 per basic share as compared to net income of $3.8 million or $0.07 per basic share for the same period one year ago. The decline in earnings continues to be a result of weakness in the hydrochloric acid market and overall lower average selling prices.


“The increased focus on sales and marketing resulted in significant revenue growth compared to the previous quarter. We anticipate this revenue ramp-up to continue into the fourth quarter,” said Mr. Liu Guocai, CEO of Migao. “Returning to profitability is also a priority focus and commitment. We saw a slight improvement to gross margin in the third quarter however we are still far from acceptable levels. We continue to address the ongoing hydrochloric acid situation and we are working with international experts to expand the potential customer and industry opportunities for the hydrochloric acid. We are also looking at our processes to determine if we can achieve further efficiencies. At the same time, we are aware of China’s evolving agricultural markets and Migao will pursue opportunities that best match imbalances in China’s supply and demand of agricultural goods and services.”

For the nine months ended December 31, 2012 Migao reported revenues of $108.8 million as compared to revenues of $263.9 million for the nine-month period ended December 31, 2011. The Company reported a net loss of $16.5 million or $0.31 per basic share for the most recent nine-month period as compared to net income of $17.6 million or $0.33 per basic share for the same nine-month period one year ago.

The Board of Directors of Migao Corporation has suspended the quarterly dividend as a result of the net loss from operations related to the ongoing weakness in the hydrochloric acid market. Earlier indications of improving market conditions have not yet led to a return to healthier demand and pricing of hydrochloric acid in China. The dividend will be reviewed again at the next quarterly meeting of Directors.

The Company’s gross profit margin (excluding inventory write-down of $0.2 million) of 2.5% for the quarter ended December 31, 2012 represents an improvement compared to the previous quarter’s 1.8% profit margin (excluding inventory write-down of $1.7 million). Compared to the same period one year ago, gross margin declined from 16.1%. The decline versus one year ago was primarily attributed to decreased sales volume and product pricing. Gross profit margin is expected to continue to improve in the fourth quarter.

It is anticipated that Sichuan Migao and the joint venture with SQM will operate at full capacity for the balance of fiscal 2013. The Company’s specialty compound facility at Zunyi Migao is anticipated to be at full capacity for the balance of fiscal 2013 as well. Potassium sulphate production at Liaoning Migao is expected to operate at its full 40,000 tonne per year production rate in the fourth quarter. It is anticipated that Guangdong Migao will operate six of its sixteen potassium sulphate units in the fourth quarter. Changchun Migao will operate at approximately 60%, and Shanghai Migao continues to be hampered by the hydrochloric acid downturn and is expected to have little production in the fourth quarter.

At the end of the period, the Company had $76.1 million (155,380 tonnes) of potassium chloride inventory with an average delivered price of $490 per tonne, of which 136,012 tonnes were on hand with the remainder being in transit. In addition, during the quarter, the Company sold 43,421 tonnes of potassium nitrate, 24,730 tonnes of potassium sulphate, 17,705 tonnes of specialty compound fertilizer, 36,590 tonnes of hydrochloric acid, and at the end of the period, the Company had $57.1 million (129,264 tonnes) of finished goods inventory on hand, including co-products.

At December 31, 2012, Migao reported cash and restricted cash of $73.6 million and working capital of $189.1 million.

Migao Corporation, through its wholly owned subsidiaries, owns and operates fertilizer production plants in various strategic locations across China for the production and sale of specialty potash fertilizer (potassium nitrate, potassium sulphate, and specialty compound fertilizers) to China’s agricultural market. Migao Corporation is subject to, and complies with strict government regulations that govern safety, quality and environmental protection.


This news release may include forward-looking statements within the meaning of certain securities laws, including the “safe harbour” provisions of the Securities Act (Ontario) and other provincial securities laws in Canada. These forward-looking statements include, among others, statements with respect to our objectives and goals, and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words “may”, “will”, “could”, “should”, “would”, “suspect”, “outlook”, “believe”, “plan”, “anticipate”, “estimate”, “expect”, “intend”, “forecast”, “objective”, and “continue” (or the negative or grammatical variations thereof), and words and expressions of similar meaning, are intended to identify forward-looking statements.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results, performance or achievements may differ materially from those expressed or implied in such statements. We caution readers not to place undue reliance on forward-looking statements as a number of important factors, many of which are beyond our control, could cause actual results, performance or achievements to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors that relate to our company include, but are not limited to: risks related to raw materials; execution of the business plan; expansion plans; dependence on key personnel; key relationships; dependence on key customers; dependence on key suppliers; competition; market factors and volatility of commodity prices; environmental risks and hazards; operating risks; proprietary rights; infrastructure; future capital requirements; technical substitution; exchange rate fluctuations; insurance; foreign operations; tobacco industry considerations; weather conditions and natural disasters; control by management; seasonality; dividends; conflicts of interest; global financial conditions; and the implementation of the Labour Contract Law in the People’s Republic of China in 2008. In addition to the foregoing risk factors, there are also risks related to doing business in China which include, but are not limited to: state ownership; government sector intervention; foreign investment; repatriation of profit and currency conversion; tax; shareholders’ rights and enforcement of judgements; developing legal system; protection of intellectual property rights; permits and business licenses; appropriation; and availability of land. Should one or more of these factors materialize, or should our estimates or underlying assumptions prove incorrect, actual results, performance or achievements may vary materially from those described in forward-looking statements.  We caution that the foregoing list of important factors that may affect our future results, performance or achievements is not exhaustive. When reviewing our forward-looking statements, readers should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about factors that may cause actual results to differ materially from expectations, and about material factors or assumptions applied in making forward-looking statements, may be found under the “Risk Factors” sections in our Annual Information Form and annual MD&A and elsewhere in our filings with Canadian securities regulatory authorities. Except as required by Canadian securities laws, we do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf; such statements speak only as of the date made. We cannot assure readers that actual results, performance and achievements will be consistent with these forward-looking statements, and the differences may be material. The forward-looking statements included herein are expressly qualified in their entirety by this cautionary language.



InvestorIntel is a trusted source of reliable information at the forefront of emerging markets that brings investment opportunities to discerning investors.

Copyright © 2019 InvestorIntel Corp. All rights reserved. More & Disclaimer »

Leave a Reply

Your email address will not be published. Required fields are marked *