Andatee China Marine Fuel Services Corporation, a company engaged in the production, storage, distribution, trading of blended marine fuel oil for cargo and fishing vessels in China, today (August 15) announced a $3.0 million rise in second quarter net income, from a net loss of $79,414 for the three months ended June 30, 2013 to a net income of $2.9 million for the corresponding period this year.
The increase in net income was mainly attributed to an increase in revenues and a decrease in selling and general and administrative expenses.
For the first six months of this year, Andatee posted a decline in net income of $0.8 million, from a net income of $255,556 for the first half of 2013 to a net loss of $509,596 in 2014. The decrease was mainly the result of a rise in interest expenses, Andatee said.
Revenue increased by $99.8 million, or 131.7%, from $75.8 million in the second quarter of 2013 to $175.5 million in 2014.
For the six months of 2014, revenue was up by $88 million or 68.1%, to $217.5 million, up from $129.4 million during the prior year period. Andatee said the increase was mainly due to higher sales volumes.
Sales volume was up by 148,598 tons, or 177.1%, from 83,896 tonnes in the second quarter of 2013 to 232,494 tonnes this year.
For the first half of 2014, overall sales volume rose by 129,793 tonnes, or 82.7%, to 286,700 tonnes, up from from 156,907 tonnes in 2013.
The company shifted its strategy from retail sales of fuel oil to wholesale sales of fuel oil to large wholesalers located at extended geographic markets, such as in Shanghai and Zhejiang Province. The wholesale business also helped to increase sales volumes, Andatee said.
The cost of revenue increased by $94.6 million, or 131.7%, from $71.8 million for the second quarter of 2013 to $166.4 million in 2014, primarily due to sales volume rising to 232,494 tonnes, up from 83,896 tonnes in the same period last year.
For the first six months, the cost of revenue increased by $83.5 million, or 68.4%, from $121.9 million in 2013 to $205.5 million this year. Andatee said this was due to sales volume rising to 286,700 tonnes, up from 156,907 tons during the first half of 2013.
Gross margins for the quarter ended June 30, 2014 increased by $5.2 million, or 131.9%, to $9.1 million compared to $3.9 million for the same period in 2013.
As a percentage of revenues, the gross profit margin was 5.2% and 5.2% for the second quarter of 2014 and 2013, respectively; and increased by $4.6 million, or 62.1%, to $12 million for the first six months compared to $7.4 million last year.
As a percentage of revenues, the gross profit margin was 5.5% and 5.7% for the six months ended June 30, 2014 and 2013, respectively. The increase was largely attributable to increased sales volume and decreased unit costs as compared to 2013. However, the slight decrease in Andatee's gross profit percentage (GP%) was due to the shift in the sales mix from retail to wholesale, the company said.
Selling expenses decreased by $118,114, or 33.0%, from $357,975 for the second quarter of 2013 to $239,831 in 2014. The decrease was mainly due to reduced sales promotions, oil storage tank and other facility lease expenses, Andatee said. As a percentage of revenues, selling expenses decreased from 0.5% to 0.1% between 2013 and 2014.
For the first six months of the year, Selling expenses were down by $345,879, or 42,3%, from $817,031 in 2013 to $471,152 in 2014. This decrease is mainly due to reduced sales promotion expenses and lease expenses. As a percentage of revenues, selling expenses decreased from 0.6% for the first six months of 2013 to 0.2% for the same period in 2014.
Second quarter general and administrative expenses decreased by $142,823, or 5.7%, from $2.49 million in 2013 to $2.34 million in 2014. The decrease was because of decreases in bad debt reserves due to the company's efforts to collect the outstanding accounts receivable and realization of the outstanding advance payments to vendors, Andatee said. Also, due to terminating the oil storage tank lease, the amortization on leaseholds decreased as well. As a percentage of revenues, general and administrative expenses increased from 3.3% for the three months ended June 30, 2013 to 1.3% for the same three-month period this year.
However, for the first six months of the year, General and administrative expenses increased by $541,539, or 13.1%, from $4.14 million in 2013 to $4.68 million in 2014. The increase was caused by increases in depreciation expense,s professional services fees and consulting fees, Andatee said. As a percentage of revenues, general and administrative expenses decreased from 3.2% to 2.2% between 2013 and 2014.
Commenting on the results,
Mr. Wang Hao, Chairman and Chief Executive Officer of Andatee China Marine Fuel Services Corporation, said: "We had a great quarter as we delivered strong top and bottom line results. We have recently shifted our strategy from retail sales of fuel oil to wholesale sales of fuel oil to large wholesalers located at extended geographic markets, such as in Shanghai and Zhejiang Province, resulting in a net income of $2.9 million. During the quarter, we also diversified our business line by acquiring Qingdao Grand New Energy Co., Ltd., a technology company which has proprietary clean energy technologies and solutions Going forward, we will continue to adjust our strategy to improve our financial performance and maintain sustainable growth in 2014 and beyond."
