Fertilizer producer China Green Agriculture, Inc. (CGA), Monday, reported a 78% surge in second-quarter net income, driven by a 60% growth in sales and improved margins. The company also raised its guidance for fiscal year 2010.
Net income for the quarter increased to $4.72 million or $0.20 per share, from $2.66 million or $0.14 per share in the prior-year quarter.
Net revenues grew 60% to $11.17 million from $7 million. Sales from the Jinong division, which sells humic acid based compound fertilizers, rose to $9.11 million from $4.95 million last year, primarily due to an increase in production capacity and the sales from more high-end products. The division accounted for 81.5% of the company's total net sales. Revenues from the Jintai division, which sells agricultural products, declined marginally by 0.3% to $2.06 million.
China Green's gross profit margin improved to 61% from 59% a year ago. Operating expenses for the quarter came to $1.33 million compared to last year's $0.95 million.
For the six months ended December 31, 2009, net income rose 62% to $9.97 million or $0.44 per share, from $6.16 million or $0.33 per share in the comparable period. Half-year revenues increased 41% to $22.45 million from $15.88 million.
Looking forward, for the third quarter, China Green expects net income of $5.1 million to $5.4 million, per-share earnings of $0.21 to $0.22, and revenues of between $12.4 million and $13.0 million.
The company also raised its fiscal year 2010 guidance, and now projects net income of $20.3 million to $20.9 million, per-share earnings of $0.87 to $0.89, and revenues in the range of $48.9 million to $50.1 million. The previous estimate had been for net income in the range of $19.7 million to $20.6 million, earnings per share in the range of $0.88 to $0.92, and revenues of between $47.9 million and $49.8 million.
"Our goal is to continue to introduce new high margin products to the market quickly with our marketing efforts focused on promoting the quality image of the 'Jinong' brand through both distributors and retail stores," said Tao Li, Chairman, President and Chief Executive Officer of China Green Agriculture.
"With our annualized production utilization rate at 29.6%, we feel our recent initiatives will provide sustainable growth while expanding both gross and operating margins and give us the capability to reach full utilization of our 55,000 metric ton capacity over the next three years. We remain on schedule in meeting our construction goals for our additional 12 new greenhouses as we continue to gain market share in China's green fertilizer industry," Li added.
CGA shares closed Friday's regular trading at $14.02 on the NYSE.
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