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.
Business Outlook
"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.
Company Contact:
Ms. Amy He, Chief Financial
Officer
Deyu Agriculture Corp.
Tel: +86-10-8273-2870 x8522
Email: amy@china-deyu.com
Financial Tables
DEYU AGRICULTURE
CORP. AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
March 31,
2014
|
|
|
December
31,
2013
|
|
|
(Unaudited)
|
|
|
(Audited)
|
Assets
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,588,678
|
|
|
$
|
979,282
|
Restricted
cash
|
|
|
16,086
|
|
|
|
16,519
|
Accounts receivable,
net
|
|
|
27,832,967
|
|
|
|
32,326,897
|
Due from related
parties
|
|
|
43,277
|
|
|
|
44,441
|
Inventory
|
|
|
5,982,523
|
|
|
|
15,318,224
|
Advance to
supplier
|
|
|
4,449,215
|
|
|
|
4,363,298
|
Prepaid
expenses
|
|
|
539,556
|
|
|
|
1,161,302
|
Other current
assets
|
|
|
120,812
|
|
|
|
115,507
|
Total Current Assets
|
|
|
40,573,114
|
|
|
|
54,325,470
|
|
|
|
|
|
|
|
|
Property, plant, and
equipment, net
|
|
|
18,232,850
|
|
|
|
19,251,051
|
Construction-in-progress
|
|
|
-
|
|
|
|
-
|
Long-term
Investment
|
|
|
58,555
|
|
|
|
60,129
|
Intangible assets,
net
|
|
|
7,545,679
|
|
|
|
7,827,809
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
66,410,198
|
|
|
$
|
81,464,459
|
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
Short-term
loan
|
|
$
|
7,269,481
|
|
|
$
|
7,464,856
|
Accounts
payable
|
|
|
4,582,938
|
|
|
|
8,538,544
|
Advance from
customers
|
|
|
1,936,326
|
|
|
|
1,990,479
|
Accrued
expenses
|
|
|
895,157
|
|
|
|
1,002,885
|
Tax
payable
|
|
|
99,290
|
|
|
|
73,790
|
Preferred stock
dividends payable
|
|
|
100,474
|
|
|
|
247,614
|
Due to related
parties
|
|
|
68,626
|
|
|
|
14,306
|
Other current
liabilities
|
|
|
230,998
|
|
|
|
282,179
|
Total Current Liabilities
|
|
|
15,183,290
|
|
|
|
19,614,653
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Series A convertible
preferred stock, $.001 par value, 10,000,000
shares authorized, 1,860,900 and 2,182,628 shares
outstanding, at March 31, 2014 and December 31,
2013,
respectively
|
|
|
1,861
|
|
|
|
2,183
|
Common stock, $.001
par value; 75,000,000 shares authorized,
11,015,029 and 10,618,266 shares outstanding, at March 31,
2014
and December 31, 2013, respectively
|
|
|
11,015
|
|
|
|
10,618
|
Additional paid-in
capital
|
|
|
21,465,778
|
|
|
|
21,225,146
|
Other comprehensive
income
|
|
|
6,452,451
|
|
|
|
7,897,730
|
Retained
earnings
|
|
|
23,263,340
|
|
|
|
32,681,588
|
Total Stockholders' Equity
|
|
|
51,194,445
|
|
|
|
61,817,265
|
Noncontrolling Interests
|
|
|
32,463
|
|
|
|
32,541
|
Total Equity
|
|
|
51,226,908
|
|
|
|
61,849,806
|
|
|
|
|
|
|
|
|
Total Liabilities and
Equity
|
|
$
|
66,410,198
|
|
|
$
|
81,464,459
|
DEYU AGRICULTURE
CORP. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
|
|
|
|
|
|
For The Three Months Ended
|
|
|
March 31,
|
|
|
2014
|
|
|
2013
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
Net
revenue
|
|
|
|
|
|
|
|
Normal
inventory
|
|
$
|
12,152,145
|
|
|
$
|
77,167,714
|
Damaged
corn
|
|
|
3,421,175
|
|
|
|
-
|
Total Net
Revenue
|
|
|
15,573,320
|
|
|
|
77,167,714
|
Cost of goods
sold
|
|
|
|
|
|
|
|
Normal
inventory
|
|
|
(11,553,198)
|
|
|
|
(68,363,540)
|
Damaged
corn
|
|
|
(9,328,942)
|
|
|
|
-
|
Total Cost of Goods
Sold
|
|
|
(20,882,140)
|
|
|
|
(68,363,540)
|
Gross
Profit
|
|
|
(5,308,820)
|
|
|
|
8,804,174
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
(1,098,652)
|
|
|
|
(3,198,595)
|
General and
administrative expenses
|
|
|
(2,678,029)
|
|
|
|
(1,882,867)
|
Total Operating
Expenses
|
|
|
(3,776,681)
|
|
|
|
(5,081,462)
|
Operating income
(loss)
|
|
|
(9,085,501)
|
|
|
|
3,722,712
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
1,080
|
|
|
|
8,100
|
Interest
expense
|
|
|
(195,653)
|
|
|
|
(175,704)
|
Non-operating income
(loss)
|
|
|
47,265
|
|
|
|
813
|
Total Other
Expenses
|
|
|
(147,308)
|
|
|
|
(166,791)
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
|
|
(9,232,809)
|
|
|
|
3,555,921
|
Income
taxes
|
|
|
(83,249)
|
|
|
|
(340,433)
|
Net income
|
|
|
(9,316,058)
|
|
|
|
3,215,488
|
Net loss attributable
to noncontrolling interests
|
|
|
159
|
|
|
|
3,619
|
Net income (loss)
attributable to Deyu Agriculture Corp.
|
|
|
(9,315,899)
|
|
|
|
3,219,107
|
Preferred stock
dividends
|
|
|
(102,349)
|
|
|
|
(116,055)
|
Net income (loss)
available to common stockholders
|
|
|
(9,418,248)
|
|
|
|
3,103,052
|
Foreign currency
translation gain
|
|
|
(1,445,198)
|
|
|
|
288,602
|
Comprehensive income
(loss)
|
|
|
(10,863,446)
|
|
|
|
3,391,654
|
Other comprehensive
income (loss) attributable to noncontrolling interests
|
|
|
(81)
|
|
|
|
10,249
|
Comprehensive income
(loss) attributable to Deyu Agriculture Corp.
|
|
$
|
(10,863,527)
|
|
|
$
|
3,401,903
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to common stockholders per share - basic
|
|
$
|
(0.87)
|
|
|
$
|
0.29
|
Net income (loss)
attributable to common stockholders per share - diluted
|
|
|
(0.87)
|
|
|
|
0.25
|
Weighted average
number of common shares outstanding - basic
|
|
|
10,793,738
|
|
|
|
10,646,266
|
Weighted average
number of common shares outstanding - diluted
|
|
|
10,793,738
|
|
|
|
12,738,439
|
DEYU AGRICULTURE
CORP. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
|
|
|
For The Three Months Ended
|
|
|
March 31,
|
|
|
2014
|
|
|
2013
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net income (loss)
available to common stockholders
|
|
$
|
(9,418,248)
|
|
|
$
|
3,103,052
|
Adjustments to
reconcile net income (loss) to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
Depreciation &
amortization
|
|
|
602,646
|
|
|
|
599,415
|
Allowance for
doubtful accounts
|
|
|
825,993
|
|
|
|
-
|
Share-based
compensation
|
|
|
585
|
|
|
|
42,208
|
Preferred stock
dividends accrued
|
|
|
102,349
|
|
|
|
116,055
|
Common stocks issued
for services
|
|
|
-
|
|
|
|
(57,200)
|
Noncontrolling
interests
|
|
|
(159)
|
|
|
|
(3,619)
|
Decrease (increase)
in current assets:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
2,889,940
|
|
|
|
7,511,752
|
Related-parties trade receivable
|
|
|
-
|
|
|
|
235,390
|
Inventories
|
|
|
9,101,545
|
|
|
|
5,576,393
|
Advance to
suppliers
|
|
|
(203,851)
|
|
|
|
(10,215,902)
|
Prepaid
expense and other current assets
|
|
|
593,903
|
|
|
|
1,074,083
|
Increase (decrease)
in liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
(3,801,786)
|
|
|
|
(1,639,659)
|
Advance
from customers
|
|
|
(2,094)
|
|
|
|
3,239,176
|
Accrued
expense and other liabilities
|
|
|
(99,669)
|
|
|
|
(476,135)
|
Net
cash provided by operating activities
|
|
|
591,154
|
|
|
|
9,105,009
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Purchase of machinery
and equipment
|
|
|
-
|
|
|
|
(4,414)
|
Construction and
remodeling of factory and warehouses
|
|
|
-
|
|
|
|
(50,172)
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
(54,586)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Net proceeds
(repayment) of short-term loans from related parties
|
|
|
55,715
|
|
|
|
(5,735,157)
|
Net repayment from
short-term loans from bank and others
|
|
|
-
|
|
|
|
417,818
|
Cash released from
restriction for credit line of bank loans
|
|
|
-
|
|
|
|
318,137
|
Net cash provided by (used in) financing activities
|
|
|
55,715
|
|
|
|
(4,999,202)
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE CHANGE ON CASH AND CASH
EQUIVALENTS
|
|
|
(37,473)
|
|
|
|
7,961
|
|
|
|
|
|
|
|
|
NET (DECREASE)
INCREASE IN CASH & CASH EQUIVALENTS
|
|
|
609,396
|
|
|
|
4,059,182
|
CASH & CASH
EQUIVALENTS, BEGINNING BALANCE
|
|
|
979,282
|
|
|
|
4,937,279
|
CASH & CASH
EQUIVALENTS, ENDING BALANCE
|
|
$
|
1,588,678
|
|
|
$
|
8,996,461
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES:
|
|
|
|
|
|
|
|
Income tax
paid
|
|
$
|
55,306
|
|
|
$
|
215,166
|
Interest
paid
|
|
$
|
105,272
|
|
|
$
|
182,471
|
NONCASH INVESTING
AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Construction
completed and transferred to property, plant, and
equipment
|
|
$
|
-
|
|
|
$
|
767,494
|
Construction
transferred to land use rights
|
|
$
|
-
|
|
|
$
|
-
|
Note: Please refer to the Company's quarterly report on Form
10-Q for the three months ended March 31,
2014 for additional notes, which are an integral part of
these consolidated financial statements.
SOURCE Deyu Agriculture Corp.