HONG KONG, Aug. 13, 2004 (PRIMEZONE) -- New Dragon Asia Corp. (AMEX:NWD) today reported results for its second quarter ended June 25, 2004, reflecting an increase in net sales, net income and gross profit margin.
Net sales for the quarter increased 56.0 percent to $8.5 million from $5.5 million a year earlier. Net income for the same period was $539,000, or $0.01 per diluted share, compared with a loss of $589,000, or $0.01 per share, a year earlier.
Net sales for the six months increased 32.6 percent to $16.0 million from $12.0 million in fiscal 2003. For the first half of 2004, net income was $877,000, or $0.02 per diluted share, compared with a loss of $273,000, or $0.01 per share, a year earlier.
"Results of the second quarter reflect improved sales derived from the company's flour business. In addition, the company is now benefiting from the addition of a new packaging factory in Yantai," said Heng Jing Lu, chief executive officer.
Gross profit for the quarter increased by almost 12 fold to $1.6 million from $133,000 a year ago. Gross profit as a percentage of sales for the same period was 18.3 percent compared with 2.4 percent a year earlier, reflecting changes in product mix.
Gross profit for the six months climbed to $2.9 million from $980,000 for the same period last year. Gross profit as a percentage of sales for the first half of 2004 was 18.1 percent compared with 8.1 percent a year ago.
Lu said that New Dragon Asia's continued focus on increasing sales within urban areas of China and progress in producing more premium products, which generate higher margins, are important components of its growth strategy.
Lu also highlighted the company's recent announcement that it has received Grade A certification by the China Green Food Development Center, an organization solely authorized by the Chinese government to issue the "green" and organic label to food producers. The green food label in China is equivalent in concept to the organic food program in the United States, with specific standards and restrictions in terms of environmental considerations and the application of fertilizers and pesticides.
"Our focus on quality, manufacturing capacity and market expansion are fundamental to New Dragon and its current and future success and we intend to capitalize on these strengths in China, as well as in other markets," Lu said.
About The Company
Headquartered in Shandong Province, P.R.C., with a corporate office in Hong Kong, New Dragon Asia Corp. is engaged in the milling, sale and distribution of flour and related products, including instant noodles, to retail and commercial customers throughout China. The company markets its well-established product line through a network of 216 key distributors and 16 regional offices in 27 Chinese provinces with an aggregate production capacity of approximately 110,000 tons of flour and more than 1.1 billion packages of instant noodles.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward- looking statements are based on current expectations or beliefs, including, but not limited to, statements concerning the company's operations and financial performance and condition. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others, the impact of competitive products and pricing; changes in consumer preferences and tastes or perceptions of health-related issues; effectiveness of advertising or market-spending programs; changes in laws and regulations; fluctuations in costs of production, foreign exchange and interest rates; and other factors as those discussed in the Company's reports filed with the Securities and Exchange Commission from time to time.
NEW DRAGON ASIA CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
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JUNE 25, JUNE 25, JUNE 25, JUNE 25,
2004 2003 2004 2003
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Net sales $ 8,547 $ 5,478 $ 15,945 $ 12,026
Cost of goods sold (6,986) (5,345) (13,051) (11,046)
------- ------- -------- --------
Gross profit 1,561 133 2,894 980
Selling and distribution
expenses (235) (248) (624) (490)
General and administrative
expenses (464) (439) (1,125) (672)
------- ------- -------- --------
Income (loss) from
operations 862 (554) 1,145 (182)
Other income and expenses:
Interest expense (33) (68) (72) (128)
Interest income 1 56 13 108
Other income 113 6 441 31
------- ------- -------- --------
Income (loss) before
provision for income taxes 943 (560) 1,527 (171)
Provision for income taxes (412) (29) (658) (102)
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Income (loss) before
minority interest $ 531 $ (589) $ 869 $ (273)
Minority interest 8 -- 8 --
------- ------- -------- --------
Net income (loss) $ 539 $ (589) $ 877 $ (273)
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Basic and diluted
earnings (loss) per
common share $ 0.012 $(0.014) $ 0.019 $ (0.007)
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Weighted average shares
used to compute basic
and diluted earnings
(loss) per common share 45,061 40,911 45,061 40,911
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