November 18, 2013

Deyu's net income rises while gross profit falls in Q3

Deyu Agriculture Corp. (Deyu) reported a net income of US$68.3 million for the third quarter of 2013, representing an increase of US$11.9 million, or 21%, compared to US$56.5 million in the same period of 2012.

However, the company's gross income for the third quarter stood at US$4.0 million, a staggering fall of US$6.2 million, or 60.9%, from US$10.2 million for the same period of last year. 

In the third quarter of 013, net revenue from the company's Corn Division topped US$47.6 million, an increase of US$12.7 million, or 36.5%, as compared to US$34.9 million for Q3 2012. The company attributed the gains to the increase in sales volume under the strategy to clear its existing corn inventory.

Net revenue from the Grain Division fell to US$9.9 million, a decrease of US$7.5 million, or 43.0%, as compared to US$17.4 million for Q3 2012. The company blamed the decline of sales in supermarkets and retail stores for the profit drop.

Net revenue from the Bulk Trading Division reached US$10.8 million, an increase of US$6.6 million, or 159.4% as compared to US$4.2 million Q3 2012. This was mainly attributable to the company's strategic shift from grain retail sales to wholesale or bulk trading.

CEO Greg Chen commented, "Our Q3 2013 financial results showed a large decrease in income. China's on-going economic slowdown has been imposing challenges on us. In addition, unexpected extreme weather conditions and increased corn imports have added to an already challenging situation."

Deyu is a Shanxi-based agricultural company. It mainly engages in the production, processing, marketing and distributor of organic and other agricultural products made grains.