Synutra earnings rise

Synutra earnings rise

Chinese infant formula maker Synutra International booked an increase in earnings during the first nine months of its financial year, driven by sales gains and improved efficiency.

The group said net income more than doubled to US$47.8m in the nine month period to the end of December. Operating income increased to $57.2m, compared to $27.7m in the year-ago period.

Chairman and CEO Liang Zhang attributed the improved performance to the group's efficiency drive and higher sales in an increasingly competitive market environment. He said: "While competition in the Chinese infant formula market increased, our results this quarter reflect our ability to maintain sales growth through a strategic product offering, including premium and niche products, and drive profitability through operational efficiency. We intend to expand these initiatives as we strategically position Synutra to achieve sustainable growth in the coming quarters and years."

Net sales increased to $303.8m from $271.8m in the prior-year period. Sales from branded powdered formula products increased to 92.7% of net sales, compared to 83.1% last year.

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Synutra Reports Third Quarter and First Nine Months of Fiscal 2015 Financial Results

~3Q15 Sales Increase 14.2% Over Prior Year Period

~~Formula Sales Increase 23.7%

~~3Q15 Net Income Increases 84.1% Over Prior Year Period

QINGDAO, China and ROCKVILLE, Md., Feb. 9, 2015 /PRNewswire/ -- Synutra International, Inc. (Nasdaq: SYUT), ("Synutra" or the "Company"), which owns subsidiaries in China that produce, distribute and sell nutritional products for infants, children and adults, today announced financial results for the third quarter and first nine months of fiscal 2015, ended December 31, 2014.

Mr. Liang Zhang, Chairman and CEO of Synutra, commented, "We are happy to report very strong results for the third quarter of fiscal 2015. We saw a 24% increase in sales in our powdered formula segment and an 84% increase in net income year-over-year. While competition in the Chinese infant formula market increased, our results this quarter reflect our ability to maintain sales growth through a strategic product offering, including premium and niche products, and drive profitability through operational efficiency. We intend to expand these initiatives as we strategically position Synutra to achieve sustainable growth in the coming quarters and years."

Third Quarter Fiscal 2015 Financial Results

Net sales were $115.3 million for the third quarter of fiscal 2015, an increase of 14.2% from $101.0 million in the third quarter of fiscal 2014. Net sales from the Company's branded powdered formula segment were $106.6 million, or 92.4% of net sales, in the third quarter, compared to $86.2 million, or 85.3% of net sales, in the prior year period. This increase was primarily driven by a 24% increase in milk formula sales by volume, and supported by a consistent average selling price relative to the prior year period. Sales of powdered formula products increased to 7,998 tons in the third quarter, compared to 6,449 tons in the prior year period.

Net sales from Nutritional Ingredients and Supplements were $5.6 million, or 4.9% of total net sales, compared to $6.3 million, or 6.2% of net sales, in the prior year period. This segment is primarily comprised of chondroitin sulfate materials sold to certain international pharmaceutical companies.

Net sales from Other Products, which includes imported whole milk powder and whey protein powder sold to industrial customers, were $3.1 million, or 2.7% of net sales, in the third quarter of fiscal 2015, compared to $8.6 million, or 8.5% of net sales, in the prior year period. The decrease in sales from Other Products was primarily due to improved inventory control such that there was not excess milk powder to be sold in bulk to industrial customers.

Gross profit was $52.7 million in the third quarter of fiscal 2015, compared to $40.3 million in the prior year period. Gross margin was 45.7%, an increase from 39.9% in the prior year. This increase was primarily due to reduced production costs from lower-priced whole milk powder. Gross margin for the powdered formula segment was 49.9%, up slightly from 49.7% in the prior year period.

Selling and distribution expenses were $15.9 million in the third quarter of fiscal 2015, compared to $12.5 million in the prior year period. Advertising and promotional expenses were $10.5 million in the third quarter, compared to $9.8 million in the prior year period. The combined percentage of sales of these two expenses increased slightly to 22.8% from 22.0% in the prior year period.

Income from operations was $19.2 million, an increase of 61.1% over the prior year period. Net income increased 84.1% to $17.9 million from $9.7 million. Net income attributable to common stockholders was $17.3 million in the third quarter of fiscal year 2015, or $0.30 per basic share, a 72.9% increase from net income of $10.0 million, or $0.17 per basic share, in the prior year period.

Nine Months ended December 31, 2014 Financial Results

Net sales for the first nine months of fiscal 2015 ended December 31, 2014 increased to $303.8 million from $271.8 million in the prior year period. Net sales from branded powdered formula products increased to $281.6 million, or 92.7% of net sales, compared to $225.9 million, or 83.1% of net sales in the prior year period.

Gross profit increased 17.4% to $135.4 million for the first nine months of fiscal 2015 from $115.3 million in the prior year period. Gross margin was 44.6% compared to 42.4% for the prior year period.

Income from operations was $57.2 million for the first nine months of fiscal 2015, compared to $27.7 million in the prior year period. Net income increased 133.3% to $47.8 million from $20.5 million.

Net income attributable to common stockholders was $45.4 million for the first nine months of fiscal 2014, or $0.79 per basic share, compared to $20.8 million, or $.36 per basic share, in the prior year period.

Original source: Synutra International