Toronto, Ontario, May 10, 2012 - Asia Bio-Chem Group Corp. (TSX: ABC) ("Asia Bio-Chem" or the "Company") announces its financial results for the three-month period ending March 31, 2012.

Highlights

  • Lower products' prices, continued high corn costs combined with lower sales volume caused gross margin to decline to negative 3.9% during the first quarter compared with 15.6% during the same period in 2011.
  • The Company adjusted capacity in response to lower gross margins which resulted in 31% capacity utilization during the quarter.
  • Lower gross margin together with higher finance charges and interest during the first quarter resulted in a net loss of $5.5 million (-$0.06 per share) compared with $2.4 million net income ($0.03 per share) during the first quarter of 2011.
  • Despite the difficult market situation, the Company continues to enjoy the strong support of its banking group as well as the local governments in Changtu and Daqing.
  • The company has reduced its total bank borrowings during the quarter to $113.6 million and maintains a total cash balance of $5.8 million at March 31, 2012.
  • Management of the Company is taking steps to improve its annual raw materials purchases and storage in an effort to stabilize gross margins.  Further, steps have been taken to alter the Company's commercial relationships with some of its customers to reduce the receivables outstanding.
  • In view of current economic conditions, the Company continues to defer the construction of its Daqing downstream expansion project.

"The first quarter of 2012 was disappointing in terms of our by-product prices as demand declined after Chinese New Year and lower quality corn resulted in lower germ prices," stated Mr. Zhiping Wang, President and CEO of Asia Bio-Chem. "While we have seen some increases in starch prices during the first quarter, corn prices remain high for this time of year which continues to create a challenging environment for our industry."

During the first quarter, lower margins resulted in scheduled production limits resulting in a 58.2% reduction in production compared with the same period in 2011 to 65,196 tonnes. Lower volumes coupled with reduced prices of germ and gluten during the first quarter of 2012 resulted in a 36.5% reduction in sales compared with the first quarter of 2011.

Lower germ and gluten prices coupled with a 3.2% increase in corn cost caused a negative gross margin of 3.9% compared with positive 15.6% during the same period in 2011.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") during the first quarter declined by 163.4%. to negative $3.1 million, as the Company experienced lower margins and higher costs including a $0.9 million provision against its allowance for doubtful accounts.

SUMMARY FINANCIAL STATEMENTS

in thousands of Canadian dollars

except per share and percentage data

Three Months Ended March 31,

2012

2011

% Change

Sales

32,486

51,150

-36.5%

Gross profit

(1,257)

7,988

-115.7%

Gross margin (% of Sales)

-3.9%

15.6%

Operating expenses

4,002

4,739

-15.5%

Income (loss) from operations

(5,259)

3,250

-261.8%

Other income (expense)

(1,813)

(973)

n/a

Income taxes (recovery)

(1,537)

(170)

n/a

Net income (loss)

(5,535)

2,446

-326.3%

EBITDA

(3,139)

4,954

-163.4%

EBITDA before stock-based compensation

(2,992)

5,305

-156.4%

Earnings per share:

Basic

(0.06)

0.03

Diluted

(0.06)

0.03

Weighted average number of shares:

Basic

85,306,258

82,346,258

Diluted

86,306,258

84,339,333

During the first quarter of 2012, net loss was $5.5 million (-$0.06 per share) compared with a profit of $2.4 million ($0.03 per share) during the same period of 2011.

During the first quarter the Company's unrestricted cash position declined to $5.8 million from $10.6 million at December 31, 2011.  Total debt declined to $113.6 million at March 31, 2012 from $120.9 million at December 31, 2011.

Conference Call

Asia Bio-Chem will be hosting a conference call to discuss the first quarter results at 10:00 a.m. EST on Friday, May 11, 2012. The details are as follows:

Dial in number: 1-888-231-8191  or 647-427-7450
Conference ID and
Replay pass code: 		78551664
Taped Replay:

1-855-859-2056 or 416-849-0833
(Available until May 25, 2012)

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