Shengtai Pharmaceutical, Inc. Reports First Quarter Fiscal Year 2013 Financial Results

WEIFANG, Shandong, China, Nov. 14, 2012 /PRNewswire/ -- Shengtai Pharmaceutical, Inc. (OTC Bulletin Board: SGTI) (''Shengtai'' or ''the Company'' or "We" or "Us" or "Our"), a manufacturer and distributor in China of glucose and starch as pharmaceutical raw materials and other starch and glucose products, today reported financial results for the three months ended September 30, 2012.

"We are very glad to announce that we had increased sales quantities and revenue, increased gross profit and increased gross profit rate for the three months ended September 30, 2012," stated Qingtai Liu, CEO of Shengtai, "We are glad to see that the average corn prices decreased during the quarter ended September 30, 2012 compared to the same period last year. Together with our successful price and profit control, we managed to increase our gross profit rate to 10.38%. We also developed new important big clients during the quarter ended September 30, 2012."

Fiscal Quarter Fiscal Year 2013 operations results

Net sales for the three months ended September 30, 2012 were $48,744,643, an increase of $8,689,195 or 21.69%, compared with $40,055,448 for the same period in 2011. The increase in net sales primarily resulted from increased cornstarch sales for the three months ended September 30, 2012, compared to the same period last year. For the three months ended September 30, 2012 compared to the same period last year, the quantities of our glucose products, cornstarch products and other products sold increased approximately 5.82%, 53.24%, and 18.69%, respectively. The increased sales quantities of cornstarch is due to a substantial increase of our Slurry sales, which increased approximately $3,257,921 or 1654.77% for the three months ended September 30, 2012 compared to $194,507 for the same period last year. The increased sales of our cornstarch products are also caused by increased new clients and a higher demand as market supplies decreased, as some smaller competitors stop their operation or supply due to market competition. Net sales from exports for the three months ended September 30, 2012 were $8,656,325, an increase of approximately 14.15%, compared with $7,583,553 for the same period in 2011. The increase is mainly attributable to the increased exporting sales of corn germ meal during the three months ended September 30, 2012 compared to the same period last year, when the export of corn germ meal was nil. 

Cost of sales for the three months ended September 30, 2012 was $43,686,665, an increase of $7,016,264 or 19.13%, compared with $36,670,401 for the same period in 2011. The increase in cost of sales was mainly due to the increase of sales offset by the decrease in the price of corn, our main raw material.

Gross profit for the three months ended September 30, 2012 was $5,057,978, an increase of $1,672,931 or 49.42%, compared with $3,385,047 for the same period in 2011. The increase of gross profit is mainly because the average corn prices increased less than the unit selling prices of our products. Gross profit margin for the three months ended September 30, 2012 was 10.38%, an increase by 1.93% as compared to the gross profit margin of 8.45% for the same period in 2011. The reason for the increase of gross profit margin is mainly because the price of corn, our main raw material, decreased approximately 1.72% for the three months ended September 30, 2012 compared to the same period last year whereas the average sales prices of glucose products, cornstarch products and other products decreased by 5.19%, 0.02%, 1.49% as compared to the same period last year. The Company believes that the Company's actions to improve gross profit margin, such as expanding raw material storage facilities to reduce the impact of fluctuation on the price of our raw materials, benefited us in improving our profitability.

For the three months ended September 30, 2012, selling, general and administrative expenses were $3,289,698, an increase of $1,137,082 or 52.82%, compared to $2,152,615 for the three months ended September 30, 2011. The increase of selling, general, and administrative expenses is caused by increased selling, general and administrative expenses in PRC, offset by decreased selling, general and administrative expenses in the United States. The Company¡'s selling, general and administrative expenses in the United States ended September 30, 2012 decreased by $104,743 compared to the same period in 2011. The decrease is mainly due to decreased salary expenses of $56,625 and decreased option expenses of $6,900 and decreased taxation expenses of $25,478. The Company incurred $0 and $6,900 non-cash stock option expenses for the three months ended September 30, 2012 and 2011, respectively. The selling, general and administrative expenses from our PRC operating entities increased by $1,241,826 for the three months ended September 30, 2012 compared to $1,931,003 for the same period in 2011. The selling expenses from our PRC operating entities increased by $816,210 or 50.15% in the quarter ended September 30, 2012 compared to the same period in 2011. The increase in selling expenses is mainly attributable to the increase in shipping and handling expenses of $771,713 as a result of increased gas price. The general and administrative expenses incurred in PRC increased $425,616 in the quarter ended September 30, 2012 compared to $303,320 for the same period in 2011. The increase is mainly attributable to the increase in salary expenses of $75,521 and loss for bad debt of 49,068 and other expenses of $172,171.    

Net income for the three months ended September 30, 2012 was $196,301, a decrease of $687,256 or 77.78%, compared with $883,557 for the same period in 2011. The decrease in net income was primarily attributable to the increased interest expenses of $863,147.

Financial Condition

As of September 30, 2012, Shengtai had cash and restricted cash totaling $7.01 million. The Company's short-term loan totaled $75.54 million and long-term debt totaled $0 million. The Company's total shareholders' equity increased to $62.41 million.

Management Comments

Looking forward, Qingtai Liu, CEO of Shengtai stated, "We will focus more on cost control in the coming quarter to increase our operating net income. At the same time, we will keep a good price and profit control to respond to the price changes of raw materials."

About Shengtai Pharmaceutical, Inc.

Shengtai Pharmaceutical, Inc. through its wholly owned subsidiary, Shengtai Holding, Inc. ("SHI"), and the Chinese operating company of Weifang Shengtai Pharmaceutical Co., Ltd., is a manufacturer and distributor in china of glucose and starch products as pharmaceutical raw materials, other starch products and other glucose products such as corn meals, food and beverage glucose and dextrin. For more information about Shengtai Pharmaceutical, Inc., please visit http://www.shengtaipharmaceutical.com.

Forward Looking Statements

Certain statements in this press release and oral statements made by the Company constitute forward-looking statements concerning the Company's business and products. These statements include, without limitation, statements regarding our ability to prepare the Company for growth, the Company's planned capacity expansion and predictions and guidance relating to the Company's future financial performance. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs, but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as unanticipated changes in product demand especially in the pharmaceutical industry, pricing and demand trends for the Company's products, changes to government regulations, risk associated with operation of the Company's new facilities, risk associated with large-scale implementation of the Company's business plan, the ability to attract new customers, ability to increase its product's applications, cost of raw materials, downturns in the Chinese economy, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. Investors are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

For more information, please contact:

Shengtai Pharmaceutical, Inc.
Ms. Yukie Ying Gao
Investor Relations Manager
Tel: +86-536-2188831
Email: [email protected]

SOURCE Shengtai Pharmaceutical, Inc.