May 25, 2010

China Organic Agriculture posts lower Q1 revenues

China Organic Agriculture, Inc. (CNOA) posted revenue for the first quarter ended March 31, 2010, at US$32.4 million, representing a decrease from the US36.7 million recorded in the same period of 2009.

This decrease reflects fewer orders in the first quarter of 2010 compared to prior period. The company attributes this decrease to the uncertainty of the economic environment as having had a negative impact on its trading activity.

Gross profit for the first quarter of 2010 was US$8.2 million, a slight decrease compared to US$8.4 million in the same period of 2009.

The gross profit margin for the first quarter of 2010 was 25.4% compared to 22.8% in the same period of 2009. This improvement in the gross profit margin largely offset the decline in revenue and was in part attributed to the company's decision to more actively trade in beans and soy, which have better margins.

As the company owns 60% of its Dalian Huiming subsidiary, 40% of total net income from Dalian Huiming was recorded as income attributed to non-controlling interest. Non-controlling interest decreased from US$2.5 million for the first quarter of 2009 to US$2.2 million in the first quarter of 2010, reflecting reduced net income from the trading operations conducted by Dalian Huiming.

Net income attributable to CNOA shareholders was US$3.0 million for the first quarter of 2010, representing a decrease compared to net income attributable to CNOA shareholders in the same period of 2009 of US$3.9 million. This decrease was largely due to the impact of the bad debt provision, the increase in interest expense and the non-recurrence of the licensing fee received in the first quarter of 2009.

Earnings per share decreased to US$0.04 per diluted share compared to US$0.05 per diluted share in the first quarter of 2009.

Meanwhile, as of March 31, 2010, CNOA had cash and cash equivalents of US$25.1 million, up from US$18.5 million as of December 31, 2009, excluding restricted cash.

CNOA is based in China and is primarily engaged in the acquisition, trading and distribution of agricultural products.