New Oriental & Chemical posts strong Q3
New Oriental Energy & Chemical Corp. (Nasdaq: NOEC), a specialty chemical and emerging alternative fuel manufacturer in The People's Republic of China, this morning reported strong fiscal 2008 third-quarter results, but lowered its full-year revenue guidance on account of severer-than-expected weather in China.
For the three months ended Dec. 31, 2007, the small cap recorded net income of $2.18 million, or $0.17 per share, compared with $0.95 million, or $0.09 per share for the third quarter of 2007.
Revenues rocketed 94% to $20.17 million from $10.64 million in the third quarter last year.
Fifty-five percent of the company’s revenues for the quarter stemmed from alternative energy sales, principally DME, while 45% was contributed by its traditional fertilizer business. For the third quarter last year, alternative energy contributed 33% to total sales.
The company also said that it saw a 1.3% year over year increase in gross profits on its DME production, which coupled with a 9% increase in gross profits on sales of urea, its principal fertilizer product, contributed to the 130% increase in net profit achieved in the period, which reached $2.2 million or $0.17 per share. This compared with $1 million or $0.09 per share in the same period last year.
At the same time, third quarter sales volume in tons declined 28.4% compared to the second quarter this year. Even with the higher per ton prices obtained it was the key reason for the $1.8 million shortfall against earlier predicted revenues for the period. The key reason for the sales decrease was the company’s decision to reduce DME output because of the increased cost of methanol, DME's principal feedstock, of which currently only up to 25% can be supplied internally, with the remainder being purchased.
The company noted that in the current quarter it is seeing the most severe winter weather China has experienced in many decades, as well as greater-than-planned price swings in the costs of methanol, its DME feedstock.
Due to the impact of the severe weather, New Oriental is lowering its revenue guidance for the fiscal year to $66 million from a previous projection of $75 million.
Management said in a press release that its full-year guidance reflects its anticipation of solid fourth-quarter growth compared to the same period last year, even given the negative impact of the snowstorms.
Shares of New Oriental Energy & Chemical Corp. (NOEC) climbed 10.4%, or $0.60, to $6.35. Shares of New Oriental Energy & Chemical Corp. have been trading in the range of $2.93 to $10.10 for the past 52 weeks.
