China Botanic Pharmaceutical (NYSEMKT:CBP) said Monday that its first quarter profit rose more than 12 percent as sales improved over 24 percent, largely on prices increases across all of the company's products.
The maker of botanical products, bio-pharmaceuticals and traditional chinese medicines in China said that for the three months that ended January 31, net income was $12.3 million, or 33 cents per diluted share, up from $10.9 million, or 29 cents per diluted share, a year ago.
Net sales jumped 24.4 percent to $28.1 million, from $22.6 million in the year-earlier period. The company said revenue growth was mainly due to price increases across all of its products during the quarter, and increasing market recognition of its Siberian Ginseng Series products, as well as other new products, such as Ginseng and Venison Extract and Badger Oil, which launched in last year's first quarter.
"We are pleased to report double digit revenue and net income growth in the first quarter of fiscal year 2012," said chairman and CEO, Shaoming Li. "Our strong growth in sales, profitability, and operating cash flow during the quarter was largely driven by increase in our average selling prices, Siberian Ginseng Series products, Ginseng and Venison Extract product and Badger Oil product."
"Our Siberian Ginseng products exhibited strong year-over-year sales growth and accounted for 58% of our total revenue in the first quarter of fiscal year 2012 compared with 52% in the same period of last year. This reflected our continued commitment to create awareness and promote our premier product, the Siberian Ginseng Series, and it will continue to remain our top priority in the future."
In addition, China Botanic said its new Ginseng and Venison Extract product, which launched in the fourth quarter of fiscal year 2010, contributed 12.5 percent of total sales in the latest quarter, versus 9.4 percent of sales in the same period last year.
Operating expenses for the first three months of fiscal 2012 were $2.9 million, as compared to $2.2 million in the same period last year. Sales and marketing expenses rose 19.7 percent year-over-year to $1.6 million, as the company expanded its efforts for its botanic anti-depression series products.
Gross margin increased slightly to 61.6 percent from 61.1 percent in the year ago period, due mainly to increased product pricing and decreased sales rebate from an average of 13.3 percent to 8.5 percent of gross sales, which was partly offset by rising raw material costs.
China Botanic said it anticipates the cost of raw materials will continue to increase in 2012 at a slow to moderate speed. As at the end of the quarter, China Botanic had around $21.4 million of cash, and no long-term debt.
Looking ahead, the company reaffirmed its guidance for sales of between $91.6 and $93.1 million, representing growth of between 26 and 28 percent over fiscal 2011 revenue of $72.7 million. Net income is expected in the range of $32.7 to $33.2 million, versus $25.9 million in 2011.
All of China Botanic's products are produced at its three GMP-certified production facilities in Ah City, Dongfanghong and Qingyang. The company distributes its products through its network of over 3,000 distributors and over 70 sales centers across 24 provinces in China.