Sunwin International Reports Profitable 2009 Second Quarter
(Market Wire 12.17 14:54:19)
Q2 2009 Net Income up 135%, Positioning for Increased Global and USA Stevia Demand
QUFU, CHINA -- (Marketwire) -- 12/17/08 -- Sunwin International Neutraceuticals, Inc.
(OTCBB: SUWN), a leader in the production and distribution of Chinese
herbs, veterinary medicines and one of the world's leading producers of all
natural, zero calorie Stevia in China, today announced its second quarter
results for fiscal 2009 for the quarter ended October 31, 2008.
The quarter showed continued growth in revenue and a significant rise in
net income even as the company increased general and administrative
expenses ahead of further global sales growth. Recent developments in the
US market where Stevia is pending FDA approval as a sweetener ingredient
include an announcement by Coca Cola to launch in the US an all natural low
calorie beverage using Stevia and comments by Pepsi Co. of products
launched in markets outside the US. Sunwin is positioned to become the
largest independent Stevia provider able to supply across the US market for
table top, wholesale and bulk sale needs.
Financial Highlights:
Revenues for the second quarter of fiscal 2009 increased 15.4% to $6.56
million as compared to revenues of $5.68 million in the second quarter of
fiscal 2008. Net income in the second quarter of fiscal 2009 was
approximately $421,000, a 135% increase compared to approximately $179,000
in the second quarter of fiscal 2008.
For the first half of fiscal 2009, revenue increased 29.2% to $12.79
million and net income increased 47.5% to more than $715,000. Gross margins
remain steady at approximately 25% reflecting variances and offsets in
costs related to the global economic upheavals affecting the cost of raw
materials, energy and shipping. The company was able to control costs in
order to maintain its current margins.
The significant increase in quarter over quarter net income was primarily
attributable to ongoing revenue growth, cost controls and efficiency gains
within the business, less increased general and administrative expenses
associated with the company's organic and strategic growth. Selling
expenses declined year over year. Income from operations net of these
changes increased 192% on a quarter to quarter comparison. Sunwin also
became a tax payer in China reducing the current year quarterly net income
by $92,430 compared to no income taxes paid in the prior year quarter.
First half net income was reduced by $166,600 in taxes year to date
compared to the prior year period of zero taxes paid.
The fiscal second quarter is the major purchasing period for Stevia raw
leaf stock by the Company and as a result, inventories increased through
raw materials purchases from $4.7 million at fiscal 2008 year end to $9.2
million at the end of the second quarter ahead of expected demand. While
inventories increased substantially, cash and cash equivalents as of
October 31, 2008 were $6.78 million, down only slightly from $6.81 million
at fiscal 2008 year end. This demonstrates the company's increasing ability
to generate internal working capital to fund its growth programs as it
addresses the increasing worldwide demand for Stevia products.
President and Chairman Laiwang Zhang, commented, "Sunwin posted yet another
strong quarter of growth, profit and conservative fiscal management of the
company's assets. The company made significant inventory purchases to
increase stevia production to meet expected growth in global demand,
eventually to include expected high US market demand as product
manufacturers are openly discussing their plans to launch low calorie
products using Stevia upon FDA approval. Sunwin is uniquely positioned to
address this potential demand as a vertically integrated supplier able to
provide both intermediate grades needed by other producers to create high
grade Stevia, as well as produce and deliver high grade Stevia customized
to a customer's particular needs at competitive costs. In the interim,
Sunwin continues to grow its business outside the US in current and
recently approved markets to the benefit of the bottom line for our
shareholders."
Outlook:
Sunwin expects to continue its growth in international markets where the
bulk of Stevia sales are today through increased production at its present
facilities and broader distribution of product through wholesale channels,
as well as the provision of mid-grade Stevia to other manufacturers who
face limited supply scenarios of this product critical for the production
of high-grade Stevia.
The company anticipates its acquisition of a 60% interest in Qufu Shengwang
Stevia Biology and Science Company will add revenue and profit in the
quarters ahead by expanding the business base in agricultural products and
profitably monetizing Stevia waste products generated from the production
of Stevia.
Sunwin's proprietary OnlySweet(TM) brand of dietary supplements sold in
retail stores across the US continues to grow with increasing interest from
major chain retailers and online distributors. OnlySweet unit sales
increased 34% during the second quarter of 2009 as compared to the prior
year. Expected US approval of Stevia is expected to open further
distribution and sales of the tabletop product currently sold, as well as
significantly increase wholesale and bulk opportunities for the food and
beverage industry in which Sunwin currently participates. Sunwin's customer
Zevia was recently featured as one of the fastest growing companies in its
category, which we believe is a strong indication of the US market
potential for Stevia and Sunwin.
Jeff Reynolds, President of the company's US subsidiary, commented, "The
company continues to see needs for increasing production of both mid-grade
and high-grade Stevia to meet growing global demand, and anticipates demand
increasing upon US FDA approval of Stevia. We believe that US approval will
also open significant interest in launching new products, which will
increase Stevia demand, as well as create additional demand on currently
limited industry production capacity for high-grade Stevia. Sunwin is
uniquely positioned as a vertically integrated producer and seller to meet
the need for high quality Stevia at competitive prices."
Company Background:
Sunwin International Neutraceuticals, Inc. engages in the areas of
essential traditional Chinese medicine, zero calorie natural sweeteners
(stevia), and veterinary medicines and feeds prepared from 100 percent
organic herbal ingredients. As an industry leader in agricultural
processing, Sunwin has built an integrated global firm with the sourcing
and production capabilities to meet the needs of consumers throughout the
world. Sunwin also makes such value-added products as specialty veterinary
food ingredients and specialty feed ingredients. For more info about
Sunwin, please visit www.sunwininternational.com
Safe Harbor Statement
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, Sunwin International Neutraceuticals, Inc.,
is hereby providing cautionary statements identifying important factors
that could cause our actual results to differ materially from those
projected in forward-looking statements (as defined in such act). Any
statements that are not historical facts and that express, or involve
discussions as to, expectations, beliefs, plans, objectives, assumptions or
future events or performance (often, but not always, indicated through the
use of words or phrases such as "will likely result," "are expected to,"
"will continue," "is anticipated," "estimated," "intends," "plans,"
"believes" and "projects") may be forward-looking and may involve estimates
and uncertainties which could cause actual results to differ materially
from those expressed in the forward-looking statements. These statements
include, but are not limited to, our guidance and expectations regarding
revenues, net income and earnings. In addition, any such statements are
qualified in their entirety by reference to, and are accompanied by, the
following key factors that have a direct bearing on our results of
operations: our expectations regarding FDA approval of stevia in the US and
the acceptance of stevia in the American consumer market. In addition, any
such statements are qualified in their entirety by reference to, and are
accompanied by, the following key factors that have a direct bearing on our
results of operations: the business operating risks and new and competing
sugar substitutes.
We caution that the factors described herein could cause actual results to
differ materially from those expressed in any forward-looking statements we
make and that investors should not place undue reliance on any such
forward-looking statements. Further, any forward-looking statement speaks
only as of the date on which such statement is made, and we undertake no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made or to reflect
the occurrence of anticipated or unanticipated events or circumstances. New
factors emerge from time to time, and it is not possible for us to predict
all of such factors. Further, we cannot assess the impact of each such
factor on our results of operations or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statements. This press release is
qualified in its entirety by the cautionary statements and risk factor
disclosure contained in our Securities and Exchange Commission filings,
including our Annual Report on Form 10-K for the fiscal year ended April
30, 2008 and our reports on Form 10-Q.