Revenue increased 17% year-over-year to $19.3 million Net income
increased 27% to $6.4 million DAQING, Heilongjiang, China, Nov. 13
/PRNewswire-Asia-FirstCall/ -- China Nutrifruit Group Limited (NYSE
Amex: CNGL) ("China Nutrifruit" or "the Company"), a leading
producer of premium specialty fruit based products in China
("PRC"), today reported financial results for the second quarter of
its 2010 fiscal year ended September 30, 2009. Second Quarter 2010
Highlights -- Net sales increased 17.2% year-over-year to $19.3
million -- Gross profit increased 24.2% year-over-year to $9.7
million, with gross margin of 50.1% -- Operating income increased
24.4% year-over-year to $8.5 million, with operating margin of
44.0% -- Net income increased 26.7% year-over-year to $6.4 million,
or $0.18 per diluted share -- China Nutrifruit's common stock is
trading on NYSE Amex Market since August 27, 2009 -- Launched a new
bilingual corporate Web site under the domain name of
http://www.chinanutrifruit.com/ -- Introduced the new blueberry
glazed fruit product, which was well received by customers and
accounted for 8.4% of net sales -- Awarded the High Tech Enterprise
certification in Heilongjiang Province "We are excited to report
another quarter with strong growth in revenue and net income, due
to growing market demand for our leading specialty fruit based
products. We continue to benefit from growth in per capita
disposable income and purchasing power as the Chinese government's
economic stimulus plan positively impacts consumer demand,"
commented Mr. Jinglin Shi, CEO of China Nutrifruit. "During the
quarter we launched a new blueberry glazed fruit product which
quickly gained popularity and was well received by our consumers.
We also expanded our market reach by adding two new distributors.
With the completion of our recent financing, we are moving forward
with our capacity expansion plans and expect to continue to achieve
profitable growth in the future." Second Quarter 2010 Results Net
sales for the second quarter of fiscal 2010 were $19.3 million, up
17.2% from $16.5 million in the same quarter of fiscal 2009. The
strong sales growth was primarily due to increased sales volume as
a result of rising demand for the Company's products. The company
launched a new blueberry glazed fruit products during the quarter
which gained strong consumer demand contributing to the overall
sales growth. During the second quarter, net sales from
concentrated juice products, which accounted for 41.6% of the total
net sales, were $8.0 million, an increase of 6.7% from $7.5 million
in the second quarter of fiscal year 2009. The new concentrate
juice production line in Mu Dan Jiang reached over 90% of
utilization rate during the fiscal quarter. Net sales from glazed
fruit and nectar, which accounted for 19.7% and 16.1% of net sales,
were $3.8 million and $3.1 million, up 45.8% and 25.0% from $2.6
million and $2.5 million in the second quarter of fiscal 2009,
respectively. During the second quarter, the Company introduced its
new blueberry glazed fruit products, which contributed $1.6 million
of sales, or 8.4% of total sales. Beverages, which represented 5.1%
of net sales, were $1.0 million, down 15.8% from $1.2 million in
the second quarter of fiscal 2009. Gross profit for the second
quarter of 2010 was $9.7 million, up 24.2% from $7.8 million for
the same period a year ago. Gross margin was 50.1% for the second
quarter of 2010 compared to 47.3% in the second quarter of 2009.
The increase in gross margin was due to a greater proportion of the
product mix from glazed fruit and nectar products which provide
higher margin of approximately 63.0% and 67.8%, respectively,
compared with fruit concentrate and concentrate pulp products,
which had gross margins of 45.6% and 33.2%, respectively, during
the quarter. On a sequential basis, gross margin increased 8.2
percentage points from 41.9% in the first quarter of fiscal 2010.
In the second quarter of 2010, selling, general, and administrative
expenses were $1.2 million, up 22.7% from $1.0 million a year ago.
Selling expenses were $0.7 million, or 3.5% of net sales, compared
to $0.7 million, or 4.0% of net sales, in the second quarter of
fiscal 2009. The decline in selling expenses as a percentage of
total revenue was due to less sales related travel expenses as the
Company established business relationships with its customers,
resulting in large, repeat orders from existing customers. General
and administrative expenses were $0.5 million, up 64.5% from $0.3
million a year ago. The significant increase in expenses was due to
higher professional fees and other expenses related to the
Company's status as a public company. Operating income in the
second quarter of fiscal 2010 was $8.5 million, an increase of
24.4% from $6.8 million a year ago. Provision for income taxes was
$2.2 million compared to $1.7 million a year ago. Net income in the
second quarter of fiscal 2010 was $6.4 million, or $0.18 per
diluted share, up 26.7% from $5.0 million, or $0.26 per diluted
share a year ago. The calculation of diluted earnings per share for
the second quarter of fiscal 2010 is based on 36.2 million shares
compared to share count of 19.3 million in the second quarter of
fiscal 2009. Six Months Results For the six months ended September
30, 2009, net sales were $28.7 million, up 28.8% from $22.3 million
in the six months ended September 30, 2009. Net sales from
concentrated juice products, which accounted for 40.7% of total net
sales in the first six months of fiscal 2010, were $11.7 million,
up 20.1% from $9.7 million during the comparable period a year ago.
Among the Company's concentrated juice products, sales of crab
apple and raspberry increased 45.9% and 345.3%, respectively. Net
sales from glazed fruit and nectar, which accounted for 16.9% and
13.8% of net sales, were $4.8 million and $3.9 million, up 21.7%
and 1.7% from $4.0 million and $3.9 million in the same period a
year ago, respectively. Sales of concentrate pulp products
accounted for 15.7% of total net sales and totaled $4.5 million, up
579.7% from $0.7 million the prior year. Gross profit increased
23.9% to $13.6 million from $11.0 million a year ago. Gross margin
was 47.5% in the first six months of fiscal year 2010 compared to
49.4% in the comparable period a year ago. Income from operations
was $10.6 million, up 16.9% from $9.1 million last year. Net income
for the six months ended September 30, 2009 was $7.9 million, or
$0.22 per diluted share, up 9.7% from $7.2 million, or $0.65 per
diluted share, in the same period of fiscal 2009. The calculation
of diluted earnings per share for the first six months of fiscal
2010 is based on 36.2 million shares compared to share count of
11.1 million in the comparable period of fiscal 2009. Financial
Condition As of September 30, 2009, China Nutrifruit had $15.5
million in cash and cash equivalents and proceeds from private
placement held in escrow account, $5.1 million in total liabilities
with no long term debt and working capital of $35.6 million.
Shareholders' equity stood at $53.0 million as of September 30,
2009. In first six months of fiscal 2010, the Company used $0.2
million in cash flow from operating activities mainly due to build
up of inventory during the peak production season and an increase
in trade receivables as a result of increased sales during the
quarter. Recent Events In October 2009, received aggregate gross
proceeds of approximately $13.31 million from a private placement
financing in which it issued a total of 403,418 units, comprised of
one share of the Company's newly-designated convertible preferred
stock and a warrant to purchase 2.5 shares of the Company's common
stock. The Company plans to use the proceeds to increase production
capacity and expand its product portfolio. Business Outlook China
Nutrifruit has begun construction of a new glazed fruit production
line, with an annual production capacity of 1,200 metric tons, and
expects to begin production in the third quarter of fiscal 2010.
This new production line will mainly produce the Company's recently
launched and increasingly popular blueberry glazed fruit product.
The Company is also in the process of acquiring a concentrate pulp
production line. With this acquisition China Nutrifruit will bring
concentrate pulp production in-house, increase production capacity,
improving its ability to manage production cycle and enhance
profitability. "The second quarter of fiscal 2010 marked a major
milestone for China Nutrifruit, as our common began trading on the
NYSE AMEX Stock Exchange and we raised capital to support our
capacity expansion plans. With the growing demand for premium
specialty fruit in the market, we are confident to execute our
growth plan to increase production capacity and expand our market
reach to increase penetration in the more affluent areas in Eastern
China," said Mr. Shi. "Fruit juice and fruit products have
relatively low consumption rates in China compared with the
developed world and represents rapidly growing market, we are
confident in our ability to capitalize on this market opportunity
and create value for our shareholders. In fiscal 2010, we expect to
achieve the make good target of $18.5 million in net income."
Conference Call Information Management will conduct a conference
call at 10:00 a.m. Eastern Time on Friday, November 13, 2009 to
discuss its second quarter 2010 results. To participate in the live
conference call, please dial the following number five to ten
minutes prior to the scheduled conference call time: 888-481-7939.
International callers should dial +1 617-847-8707. The pass code
for the call is 449 613 08. If you are unable to participate in the
call at this time, a replay will be available on Friday, November
13, 2009 at 12:00 p.m. Eastern Time, through Friday, November 27,
2009. To access the replay, dial 888-286-8010. International
callers should dial 617-801-6888. The conference pass code is 894
600 66. About China Nutrifruit Group Limited Through its subsidiary
Daqing Longheda Food Company Limited, China Nutrifruit, is engaged
in developing, processing, marketing and distributing a variety of
food products processed primarily from premium specialty fruits
grown in Northeast China, including golden berry, crab apple,
blueberry and raspberry. The Company's processing facility
possesses ISO9001 and HACCP series qualifications. Currently, the
Company has established an extensive nationwide sales and
distribution network through 70 distributors in China. For more
information, please visit http://www.chinanutrifruit.com/ .
Forward-Looking Statements This press release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"").
Such statements include, among others, those concerning our
expected financial performance and strategic and operational plans,
our plan for production capacity expansion, as well as all
assumptions, expectations, predictions, intentions or beliefs about
future events. You are cautioned that any such forward-looking
statements are not guarantees of future performance and that a
number of risks and uncertainties could cause actual results of the
Company to differ materially from those anticipated, expressed or
implied in the forward-looking statements. The words "believe,"
"expect," "anticipate," "project," "targets," "optimistic,"
"intend," "aim," "will" or similar expressions are intended to
identify forward-looking statements. All statements other than
statements of historical fact are statements that could be deemed
forward-looking statements. Risks and uncertainties that could
cause actual results to differ materially from those anticipated
include risks related to 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; any statements of belief or intention; any of
the factors mentioned in the "Risk Factors" section of our Current
Report on Form 10-Q filed on September 30, 2009, and other risks
and uncertainties mentioned in our other reports filed with the
Securities and Exchange Commission. The Company assumes no
obligation and does not intend to update any forward-looking
statements, except as required by law. --Financial Tables Follow--
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Stated in US
Dollars) September 30, March 31, 2009 2009 ASSETS Current assets:
Cash and cash equivalents $4,590,725 $4,768,542 Cash held in escrow
account 10,874,169 -- Trade receivables, net of allowance
12,827,089 11,423,996 Inventories, net 12,149,512 3,692,892 Other
current assets 245,046 481,679 Total current assets 40,686,541
20,367,109 Property and equipment, net 15,894,325 16,614,930
Deferred tax assets 1,297,189 1,406,814 Land use rights, net
186,882 189,303 TOTAL ASSETS $58,064,937 $38,578,156 LIABILITIES
AND SHAREHOLDERS' EQUITY Current liabilities: Other payables and
accrued expenses $1,751,250 $2,675,983 Trade payables 1,165,599
260,322 Income taxes payable 2,135,700 1,416,835 Total current
liabilities 5,052,549 4,353,140 Non-current liabilities: Amounts
due to shareholders -- 7,407,748 TOTAL LIABILITIES 5,052,549
11,760,888 Noncontrolling interests -- -- Commitments and
Contingencies Shareholders' equity Preferred stock Authorized:
5,000,000 shares, par value $0.001 Issued and outstanding: 359,502
shares as at September 30, 2009; (nil as at March 31, 2009) 360 --
Common stock Authorized: 120,000,000 shares, par value $0.001
Issued and outstanding: 36,125,754 shares as at September 30, 2009;
(36,125,754 shares as at March 31, 2009) 36,126 36,126 Additional
paid-in-capital 35,035,775 16,746,971 Statutory reserves -
restricted 2,873,880 2,873,880 Accumulated other comprehensive
income 445,483 425,675 Retained earnings 14,620,764 6,734,616 TOTAL
SHAREHOLDERS' EQUITY 53,012,388 26,817,268 TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $58,064,937 $38,578,156 CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED) (Stated in US Dollars) Three
months ended Six months ended September 30, September 30, 2009 2008
2009 2008 Net sales $19,324,868 $16,495,353 $28,683,933 $22,270,612
Cost of sales (9,641,849) (8,697,099)(15,053,882)(11,270,854) Gross
profit 9,683,019 7,798,254 13,630,051 10,999,758 Selling expenses
(677,760) (656,299) (1,498,140) (1,088,036) General and
administrative expenses (501,365) (304,702) (1,515,070) (825,744)
Operating earnings 8,503,894 6,837,253 10,616,841 9,085,978 Other
income (expenses) Interest expense -- (128,089) -- (189,079) Other
income 31,623 6,009 39,367 19,447 Total other income (expenses)
31,623 (122,080) 39,367 (169,632) Earnings before noncontrolling
interests and income taxes 8,535,517 6,715,173 10,656,208 8,916,346
Provision for income taxes (2,184,779) (1,703,066) (2,770,060)
(1,517,977) Earnings before noncontrolling interests 6,350,738
5,012,107 7,886,148 7,398,369 Noncontrolling interests -- -- --
(209,308) Net earnings 6,350,738 5,012,107 7,886,148 7,189,061
Other comprehensive income Foreign currency translation 17,500
(681,907) 19,808 (367,488) Comprehensive income $6,368,238
$4,330,200 $7,905,956 $6,821,573 Earnings per share Basic $0.1758
$0.2599 $0.2183 $0.6488 Diluted $0.1753 $0.2599 $0.2179 $0.6488
Weighted average number of common stock outstanding Basic
36,125,754 19,287,708 36,125,754 11,080,372 Diluted 36,226,175
19,287,708 36,187,189 11,080,372 CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (UNAUDITED) (Stated in US Dollars) Six months ended
September 30, 2009 2008 Operating activities: Net earnings
$7,886,148 $7,189,061 Adjustments to reconcile net earnings to net
cash used in operating activities Noncontrolling interests --
209,308 Depreciation and amortization 748,912 404,604 Benefit for
deferred income taxes 109,625 (666,978) Loss on disposal of
property and equipment -- 287 Changes in operating assets and
liabilities: Trade receivables (1,389,136) (7,065,054) Inventories
(8,448,704) (10,451,177) Prepayments -- (1,749,140) Other current
assets 236,678 3,948 Trade payables 904,587 5,367,497 Income taxes
payable 716,902 893,793 Advances from customers -- 4,166,599
Consideration payables -- (5,343,723) Amount due to a director --
2,883,294 Amount due to an affiliate -- (61,369) Other payables and
accrued expenses (927,211) 1,534,100 Net cash used in operating
activities (162,199) (2,684,950) Investing activities: Cash outflow
from acquisition of subsidiaries -- (1,441,647) Purchases of
property and equipment -- (13,017,397) Proceeds from disposal of
property and equipment -- 3,892 Net cash used in investing
activities -- (14,455,152) Financing activities: Proceeds from
borrowings -- 7,208,236 Repayment of borrowings -- (2,883,294)
Amounts due to shareholders -- 7,348,686 Proceeds from issue of
common stock -- 4,706,467 Proceeds from private placement
11,860,000 -- Cost of raising capital (985,831) (1,083,622) Net
cash provided by financing activities 10,874,169 15,296,473
Increase/(decrease) in cash and cash equivalents 10,711,970
(1,843,629) Effect of exchange rate on cash and cash equivalents
(15,618) (474,162) Cash and cash equivalents at beginning of the
period 4,768,542 7,104,849 Cash and cash equivalents and proceeds
from private placement held in escrow account at end of the period
$15,464,894 $4,787,058 Analysis of balances: Proceeds from private
placement held in escrow account $10,874,169 $-- Cash and cash
equivalents 4,590,725 4,787,058 $15,464,894 $4,787,058 Supplemental
disclosure of cash flows information: Cash paid for: Interest $--
$159,789 Income taxes $1,943,534 $1,265,735 Supplemental disclosure
of non-cash information: Issuance of warrants $327,000 $-- For more
information, please contact: Company Contact: Mr. Colman Cheng,
Chief Financial Officer China Nutrifruit Group Limited Tel:
+852-9039-8111 Email: Web: http://www.chinanutrifruit.com/ Investor
Relations Contact: Mr. Crocker Coulson, President CCG Investor
Relations Tel: +1-646-213-1915 (NY office) Email: Web:
http://www.ccgirasia.com/ DATASOURCE: China Nutrifruit Group
Limited CONTACT: Company Contact: Mr. Colman Cheng, Chief Financial
Officer, China Nutrifruit Group Limited, or +852-9039-8111, or ;
Investor Relations Contact: Mr. Crocker Coulson, President, CCG
Investor Relations, +1-646-213-1915 (NY office), or Web site:
http://www.chinanutrifruit.com/
Copyright
