25th Feb 2014 11:49
LONDON (Alliance News) - Sorbic International PLC Tuesday said trading in the first quarter of the current financial year has been strong, both significantly ahead of last year and of management expectations.
In an statement to shareholders at its annual general meeting on Tuesday, the Chinese sorbates producer said revenue increased by 5% in the three months ended December 31, 2013, with earnings before interest, taxes, depreciation and amortisation for the quarter running at more than 50% up the 2012.
For the year ended September 30, Sorbic reported a drop in revenues, and a significantly widened loss, as plans to rebuild its existing facility in Inner Mongolia were abandoned, resulting in an impairment loss of GBP6.7 million during the year. It said that its pretax loss for the financial year widened to GBP6.1million, compared with a loss of GBP144,406 a year earlier. Before the impairment loss, the group reported a profit from operations of GBP603,671, compared with GBP21,699 a year earlier.
In its trading update Tuesday, Sorbic said its strategic partnership with APAC Chemical Corp continues to progress well, and it is working closely with APAC to improve the stability of the business and reduce exposure to the spot market for raw materials, whilst securing beneficial sourcing prices.
Sorbic said improved stability has enabled it to operate at full capacity whilst achieving more attractive gross margins.
Sorbic said it will soon start discussions with authorities in Linyi regarding whether it will move its factory to a light industrial area within the current zone it is currently in, or to a new industrial park close by. It said the factory's current area is now a high-tech zone, making the factory out of place. It said the outcome of the discussion is expected at some point during the first half.
"Once an agreement has been reached, construction of the new facility will commence and the board anticipates that the build programme will be approximately 12 months. It is expected that this will be funded by the Linyi authorities, together with the company's existing resources," Sorbic said in its statement.
Sorbic also said that negotiations and discussions with authorities in Inner Mongolia and are about to enter the next phase, and it is still anticipating that the compensation agreement will be 'fair and reasonable' to both parties.
Shares were trading 0.8% higher Tuesday at 8.06 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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