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Andatee China Marine Fuel Services Corporation, a leading independent operator engaged in the production, storage, distribution, trading of blended marine fuel oil for cargo and fishing vessels in China, has announced that gross profit rose by 6900% year-on-year in its unaudited financial results for the third quarter of 2013.

Gross profit during the three months to September 30 increased to $4.9 million compared to $0.07 million in the same period of 2012, while the gross profit margin during the quarter improved 780 base points year-on-year to 8% from 0.2%.

Commenting on the overall results, Fengbin An, Chairman & CEO of Andatee Marine Fuel Services Corporation, said: "We are excited to report a strong quarter to our shareholders. Our strong focus on wholesaler business as well as continuing effort to enhance our top line and bottom line growth are the main causes of our strong financial performance during the quarter. Recently, we are beginning to see some noticeable improvement in terms of shareholder confidence and interests. Going forward, the management will continue to strive to build our shareholder value by delivering solid financial performance."

Third quarter of 2013 results

Revenue increased by $30 million, or 95%, to $61.5 million during the third quarter ended September 30, 2013, up from $31.5 million during the corresponding period last year.

The increase in the company's revenue was mainly attributed to the increase in sales volume. The increase in sales volume was said to be primarily driven by increased customer demand for 180 cst, #1, #2 and #4 blended fuel oil.

Approximately 25.5% of Andatee's revenue was from sales of 180cst fuel oil, 28.5% from sales of #1 fuel oil, 20.1% from #2 fuel oil sales and 10.3% from sales of #4 fuel oil.

In an analysis of total sales volume for the nine months ended September 30, 2013, approximately 16.1% was from sales of our 180CST fuel oil, about 15.1% was from sales of #1 fuel oil and around 45.6% was from sales of #4 fuel oil.

Cost of revenues increased by $25.2 million, or 80%, to $56.6 million during the third quarter of 2013, up from $31.4 million the previous year. This was mainly attributed to an increase in sales volume from 39,533 tonnes for the third quarter of 2012 to 121,573 tonnes in 2013.

Gross profit increased by $4.83 million, or 6389%, to $4.9 million for the quarter of 2013 compared to $75,700 in 2012. As a percentage of revenues, gross profit margin was 8% and 0.2% for the third quarter of 2013 and 2012, respectively.

Total operating expenses from continuing operations for the third quarter of fiscal 2013 were $3.9 million, representing an increase of 116.7% from $1.8 million in the prior year period.

Selling expenses increased by $35,337, or 11%, from $332,279 for the third quarter of 2012 to $367,616 in 2013. This increase was said to be mainly due to the company's increased sales promotion efforts to target large wholesalers during third quarter of 2013 in order to secure bulk sales of fuel oil to them. As a percentage of revenues, selling expenses decreased from 1.1% in the third quarter of 2012 to 0.6% in 2013.

General and administrative expenses increased by $2.11 million, or 135%, from $1.43 million for the third quarter of 2012 to $3.54 million in 2013. The increase was caused by increases in the depreciation expense, bad debt reserves, professional service fees, consulting fees and stock-based compensation expenses, Andatee said. As a percentage of revenues, general and administrative expenses increased from 4.5% for the third quarter of 2012 to 5.8% for the third quarter of 2013.

Interest expense decreased by $1.27 million year-on-year, from $2 million in the third quarter ended September 30, 2012 to $0.74 million in 2013. The decrease in interest expense was due to the amortization of prepaid interest expense incurred on bank acceptance bills and short-term bank loans for the three months ended September 30, 2013.

Net loss attributable to the company decreased by $2.44 million, from a net loss of $2,983,148 for the third quarter ended September 30, 2012 to a net loss of $542,859 in 2013. The decrease in net loss was said to be mainly the result of an increase in sales revenue and gross profit margin, a decrease in unit cost and interest expense, offset by increased operating expenses for the period indicated.

Financial condition

As of September 30, 2013, the company had a cash balance of approximately $11.3 million, and an addition to $69.3 million in restricted cash.