New Oriental Energy & Chemical Corp.(NASDAQ: NOEC) (the "Company"), a China-based specialty chemical andemerging coal-based alternative fuel manufacturer, reported today anarrowed loss of $(1,616,408) for the third quarter of fiscal year 2010,compared with a loss of $(2,130,827) in the same period last year, and aloss of $(3,155,659) in its second quarter this year.
fake rolexWhile revenues in the third quarter ended December 31, 2009 declined to$8,770,449 compared to $10,614,418 in the same period last year, theyincreased $1,217,334 or 16% from the second quarter this year, primarilydue to increased methanol sales.
For the nine months ended December 31, 2009 the Company reported revenuesof $24,704,321 compared with $40,533,491 in the first nine months of theprevious fiscal year. The net loss of $(7,940,922) in the first ninemonths this year compared with a net loss of $(1,858,266) in the sameperiod in fiscal 2009. The decline in three month and nine month revenueswas a consequence of the Company's decision to temporarily halt theproduction and sale of DME until market conditions improve. Losses inthese periods stemmed from first half losses in the Company's fertilizerbusiness and increased losses on higher methanol sales where pricing couldnot match increases in production costs.
Fertilizer Turnaround
A turnaround in the Company's fertilizer business was reflected in a thirdquarter gross profit of $467,782, on a small increase in sales, comparedwith a $(647,098) loss in the same period last year. The improvement cameprimarily from improved gross profits in urea which increased to $500,895compared with a loss of $(532,617) in last year's third quarter, as theCompany was able to capitalize on lower raw material costs and steadydemand.
With respect to the Company's halt in DME sales, the Company has gonethrough a prolonged period where the economics of producing this coal-basedalternative fuel have been unfavorable as reflected, in particular, inrelatively low world oil and DME prices and relatively high coal prices inChina. The cleaner, more environmentally sound coal-based DME produced bythe Company competes against wide usage in China of LPG for home heatingand cooking. The Company said that in the third quarter it saw increaseddemand for methanol which it produced to maintain its market positiondespite negative gross margins.
DME Sales Expected To Resume In The Near Future
Mr. Chen Si Qiang, CEO and Chairman of the Company, stated, "We continue tosee progress on the horizon in demand for our alternative fuels and in thedynamics of cost and pricing for producing these more efficient and cleanalternatives to LPG, diesel and gasoline. As such, we believe we willcontinue to produce methanol and at some point soon resume production ofDME when the price for DME increases to over RMB 3,150 per ton in China.Our aim also is to resume completion of the new methanol/DME facility inJune, keeping in mind that we have used cash flow and loans to finance itsconstruction and have had to postpone activity on the plant pending animproved business and financing environment. Once DME production isresumed, we believe it will take about a year of steady improvement to seenormalization in production levels. Longer term, we still envision a verybright future in China for coal-based DME."
Liquidity
On January 4, 2010, the Company obtained a short-term bank loan for RMB 16million (approximately $2.34 Chanel Replica Handbags million) with an interest rate of 10.08% perannum from Xinyang Commercial Bank, which is due on January 4, 2011. TheCompany's major shareholder has also
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