China’s Emerald Dairy posted a 34.8% drop in full-year net income yesterday (13 April), hurt by a one-time charge and an increase in operating expenses.
Net income for the 12 months to 31 December dropped to US$2.3m, from $3.6m for fiscal year 2007. The company incurred a one-time charge of $986,699 in liquidated damages resulting from “failure to satisfy certain registration requirements”.
Total sales revenues for the period rose 49.7% to $44.3m, from $29.6m in the previous year.
The increase was due to the company’s market expansion into 20 provinces and over 5,800 retail outlets; the increasing popularity of the products due to sales and marketing efforts, and an increase in the average selling price of 34.9%.
The total exceeded the company’s guidance in October 2008 that estimated revenues would increase 42%.
Shu Kaneko, CFO for Emerald Dairy, said: “We are extremely pleased with our results for 2008, which exceeded our initial expectations and which support our decision to expand our production capacity in the coming year.
Due to our reputation for high quality and our continued sales and marketing efforts, we have experienced growth well above the industry average,” Kaneko added.
The company said that for the next three years it plans to focus on “rapidly expanding” its production capacity in a bid to “keep pace with the growing demand for its products”.
In July 2008, the company began construction of a new production facility. The first phase is expected to cost around $20m. Upon completion of the first phase, the new facility will have one production line, which will have the capacity to produce an additional 9,000 tons of milk power annually, doubling the company’s current capacity.
It is anticipated that production at the new facility will start in the third quarter, assuming the company obtains the remaining $6m required to complete construction and fully equip the first production line.