Some animal health companies see China as key for expansion. But the large market has its own domestic players, including Skystar Bio-Pharmaceutical ($SKBI). And it is seeing growth itself.
Xi'an-based Skystar reported a strong second quarter ending June 30 with revenue increasing by 25.6% year-over-year to $14.2 million from $11.3 million. The Chinese company manufactures and distributes veterinary medicines, vaccines, microorganisms and feed additives.
Revenue for veterinary medicines increased by 36.7% compared to the same period last year, totaling $8.6 million. Veterinary vaccines only pulled in $5,142 in revenue and saw a sharp decrease of 99% year over year, which the company attributed to a transition from a small-scale laboratory production to a larger one. Meanwhile, feed additives shot up by 50.9%, totaling $0.8 million, and probiotic microorganism products increased by 20.4%, bringing in $4.9 million.
"Revenues were driven by our veterinary medications line, up 37% year over year, whose average selling price increased 60% due to increased sales in premium priced products. Additionally, Skystar added 48 production permits to its medications line since the year-ago period," said Weibing Lu, chairman and CEO of Skystar, in a statement.
Gross profit for the second quarter climbed 6.7%, or $0.4 million, from $6 million compared to the same period last year. Gross margin was 44.7%, falling from 52.6% in the same period last year. The company attributed the decline to the fact that revenue came mainly from its less profitable veterinary medications product line.
As of June 30, Skystar had about $16.4 million in cash, current assets of $107.1 million and total current liabilities of $42.3 million, resulting in net working capital of $64.8 million, according to the second-quarter earnings report.
"In moving forward with the company's growth initiatives, we continue to build infrastructure and make improvements to our other production lines including probiotic and feed additive which ultimately provide a complete suite of animal healthcare products that can be sold and marketed across our proprietary franchised-based sales channel and distribution network that spans all 29 farming provinces in China," Lu said in a statement.
- here's the release