Yangling, Shaanxi, China, June 01, 2020 (GLOBE NEWSWIRE) -- Kiwa Bio-Tech Products Group Corp. (KWBT) (“Kiwa Bio-Tech” or “the Company”), an emerging agricultural company that develops, manufactures and markets bio-fertilizers in the multi-billion China agriculture and aquaculture markets, and develops smart soil remediation technology for global agriculture markets, today announced its financial results for the fiscal year ended December 31, 2019.
Mr. Wade Li, CEO of Kiwa Bio-Tech commented, “We are excited to announce that we achieved expected revenues and gross profit for fiscal year 2019, which represented a year-over-year increase of 31% and 13%, respectively. At the same time, the Company divested some of the Company's branches in China for optimizing the operating structure, resulting in financial losses despite the growth of operations. We continued to increase our production capacity and presences to address the tremendously market in China. Our customers associate Kiwa’ brand with trust and reliability, which demonstrated by our solid profit figures and increasing sales.”
Mr. Li continued, “The COVID-19 pandemic bought challenges and opportunities to us. We will continue to run the business in a disciplined way in 2020 and remain focused on generating long-term relative growth while driving long-term value for our shareholders and meeting our customers' full range of needs. Looking forward, we are confident in our ability to achieve strong results and continued growth.”
Fiscal Year 2019 Financial Highlights
- Revenues increased by 31% to $40.1 million for the fiscal year ended December 31, 2019 from $30.7 million for the prior fiscal year.
- Gross profit increased by 13% to $9.3 million for the fiscal year ended December 31, 2019 from $8.3 million for prior fiscal year.
- Gross margin decreased by 4.0 percentage points to 23% for the fiscal year ended December 31, 2019 from 27% for the prior fiscal year.
- Net loss was $6.6 million, or $0.29 per basic and diluted share, for the fiscal year ended December 31, 2019, compared to net income of $0.3 million, or $0.02 per basic and diluted share, for the same period of last year.
Fiscal Year 2019 Financial Results
Revenue
Total revenue for the fiscal year ended December 31, 2019 increased by $9.4 million, or 31%, to $40.1 million from $30.7 million for the same period of last year. More sales are achieved for most of our four product lines in quantities are due to the good quality of our products and more reputation gained in different regions of the PRC, such as Hainan Province, Guangdong Province and Shaanxi Province upon establishment of our sales channel in different regions.
Revenue from Biological Organic Fertilizer increased by $0.7 million, or 5%, to $16.0 million for the fiscal year ended December 31, 2019 from $15.3 million for the same period of last year. Revenue from Compound Microbial Fertilizer increased by $7.3 million, or 54%, to $20.8 million for the fiscal year ended December 31, 2019 from $13.5 million for the same period of last year. Revenue from Bio-Water Soluble Fertilizer increased by $1.5 million, or 80%, to $3.3 million for the fiscal year ended December 31, 2019 from $1.8 million for the same period of last year. Revenue from Microbial Inoculum Fertilizer was $13,210 for the fiscal year ended December 31, 2018. The Company did not sell any Microbial Inoculum Fertilizer during the year ended December 31, 2019.
Average selling prices of Biological Organic Fertilizers, Compound Microbial Fertilizer and Bio-Water Soluble Fertilizer decreased by $8.21 or 5%, $14.03 or 4% and $16.15 or 2%, respectively in the fiscal year ended December 31, 2019 as compared with the same period of 2018. This decrease is mainly due to the fluctuation of exchange rate as Chinese Yuan depreciated against U.S. dollars by approximately 4% for the year 2019 compares to the year 2018.
Cost of Revenue
Total cost of revenue for the fiscal year ended December 31, 2019 increased by $8.4 million, or 37%, to $30.8 million from $22.4 million for the same period of last year.
Average unit cost of Biological Organic Fertilizers decreased by $2.65 or 2% in the fiscal year ended December 31, 2019 as compared with the same period of last year. The decrease is mainly due to the fluctuation of exchange rate changes as Chinese Yuan depreciated against U.S. dollars by approximately 4.4% and offset by a slightly increase in overall purchase price of the raw material. Average unit cost of Compound Microbial Fertilizer increased by $2.52 or 1% in the fiscal year ended December 31, 2019 was mainly due to increase in overall purchase price of raw material. Average unit cost of Bio-Water Soluble Fertilizer decreased by $15.14 or 3% in the fiscal year ended December 31, 2019 was mainly due to the RMB depreciation against USD of approximately 4.4% along with a 2.6% decrease due to we outsourced manufacturing to a third party vendor in the year ended December 31, 2019 compares to the year ended December 31, 2018.
The Company did not sell any Microbial Inoculum Fertilizer during the year ended December 31, 2019. (Another major product of the Company).
Gross profit and gross margin
Gross profit increased by $1.1 million, or 13%, to $9.3 million for the fiscal year ended December 31, 2019 from $8.3 million for the same period of last year. Gross margin decreased by 4 percentage points to 23% for the fiscal year ended December 31, 2019, from 27% for the same period of last year, due to higher retail profit margins.
Gross margin for Biological Organic Fertilizer decreased by 2 percentage points to 30% for the fiscal year ended December 31, 2019, from 32% for the same period of last year, mainly due to the decrease in average unit cost less than the decrease in average selling price of our products.
Gross margin for Compound Microbial Fertilizer decreased by 4 percentage points to 17% for the fiscal year ended December 31, 2019, from 21% for the same period of last year, mainly due to the increase in average unit cost was less than the decrease in average selling price of our products.
Gross margin for Bio-Water Soluble Fertilizer remains unchanged as 31% for year ended December 31, 2019 and 2018, respectively.
Gross margin for Microbial Inoculum Fertilizer was 7% for the fiscal year ended December 31, 2018. The Company did not sell any Microbial Inoculum Fertilizer during the year ended December 31, 2019. (Another major product of the Company).
Loss on Sales of Subsidiaries
We were in the position of integrating and closing our offices from different locations and consolidated our bio-technological products business to Kiwa Yangling as we deemed restructuring our offices into our headquarters is the best course for the Company. On October 21, 2019, we transferred all of our right, title and interest in Kiwa Bio-Tech Asia Holdings (Shenzhen) Ltd. (Kiwa Asia), Kiwa Baiao Bio-Tech (Beijing) Co., Ltd. (“Kiwa Beijing”), Kiwa Bio-Tech Products (Shenzhen) Co., Ltd. (“Kiwa Shenzhen”), and Kiwa Bio-Tech Products (Shenzhen) Co., Ltd. Xian Branch Company, (“Kiwa Xian”), to the Hong Kong Sano Group Co., Ltd. for the HKD 17,000,000 equivalent of US $2,169,862, which resulted in a non-operating loss of $3,527,254.
Net income(loss)
Non-operating net loss was $6.6 million, or $0.29 per basic and diluted share for the fiscal year ended December 31, 2019, compared to net income of $0.3 million, or $0.02 per basic and diluted share for the same period of last year.
Financial Condition
As of December 31, 2019, the Company had cash of $7,965, compared to $ 7,859 as of December 31, 2018.
Net cash provided operating activities was $0.2 million for the fiscal year ended December 31, 2019, compared to net cash used in operating activities of $1.6 million for the same period of last year.
Net cash used in investing activities was $2,070,522 for the fiscal year ended December 31, 2019, compared to $52,992 for the same period of last year.
Net cash provided by financing activities was $1.5 million for the fiscal year ended December 31, 2018, compared to $0.6 million for the same period of last year.
About Kiwa Bio-Tech Products Group Corp.
Leader in Eco-friendly Agricultural Industry Chain
Kiwa Bio-Tech Products Group Corp. (KWBT) is an emerging agricultural company that develops, manufactures and distributes innovative and environmentally safe bio-technological products for agriculture and aquaculture markets with corporate headquarters in the Yangling, Shaanxi, China. Kiwa’s focus is to positively impact the environment by reducing the amount of chemical fertilizers that are being used by agricultural growers in China. Kiwa’s products are covered by patent protection and are designed to enhance the quality of human life by increasing the value and productivity of agricultural crops. For more information, please visit the Company’s website at www.kiwabiotech.com.
Forward-Looking Statements
This press release contains information that constitutes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements involve risk and uncertainties that could cause actual results to differ materially from any future results described by the forward-looking statements. Risk factors that could contribute to such differences include those matters more fully disclosed in the Company’s reports filed with the U.S. Securities and Exchange Commission. The forward-looking information provided herein represents the Company’s estimates as of the date of the press release, and subsequent events and developments may cause the Company’s estimates to change. The Company’s actual results may differ materially from those anticipated in the forward-looking statements depending on a number of risk factors including, but not limited to, the following: general economic, business and environment conditions, development, shipment, market acceptance, additional competition from existing and new competitors, changes in technology, the execution of its ten-year growth plan, the foreign exchange risk amid the unexpected announcements by the PRC government and various other factors beyond the Company’s control. Kiwa Bio-Tech Products Group Corp. specifically disclaims any obligation to update the forward-looking information in the future. Therefore, this forward-looking information should not be relied upon as representing the Company’s estimates of its future financial performance as of any date subsequent to the date of this press release.
For investor and media inquiries, please contact:
Ascent Investor Relations LLC
Ms. Tina Xiao
Email: ir@kiwabiotech.com