Deyu is a Shanxi Province, China-based vertically integrated producer, processor, marketer and distributor of organic and other agricultural products made from corn and grains.
Net revenue was $15.6 million, as compared to $77.2 million in the first quarter of 2013. Gross loss was $5.3 million, as compared to gross profit $8.8 million a year ago. Loss per diluted share was 87¢ on 10.8 million shares, as compared to income per diluted share of 25¢ on 12.7 million shares in 2013.
"Corn is mainly used as raw material for livestock feeds and deep processed products such as corn starch and ethanol. The demand for corn declined dramatically in 2013. The corn market experienced a downturn, a result of weak demand from the downstream industries with consecutive increases in output in the past few years in China," said Hong Wang, acting chief executive officer. "The on-going downturn continued to impact our business in 2014. In the first quarter of 2014, the trend continued. Pork prices continued to decline and the demand of livestock feeds made of corn remained very weak. In addition, the deep processed corn industry has been depressed for a few years. Many deep processed corn companies have been running under production capacity and have not been profitable. Demand for corn in the deep processed corn industry continues to remain very low. The company is now undertaking a conservative strategy in sales development as a temporary measure to cope with the weak demand in the market."
Net revenue from the Corn Division was approximately $8.3 million, a decrease of $27.1 million, or approximately 76.5%, as compared to $35.4 million for the first quarter of 2013. The decrease was mainly the combined result of a decrease of 42.8% in sales volume and a decrease of 58.9% in the average annual selling price of corn.
Net revenue from the Grain Division was approximately $6.7 million, a decrease of $5.7 million, or 46.2%, as compared to $12.4 million for the same quarter a year ago. The decrease was mainly attributable to the reduction in retail sales caused by the deteriorating efficiency of traditional retail sales
"Given that the decrease in demand of corn from downstream industries, another good corn harvest in 2013 and anticipated increases in corn imports with low prices, we expect the oversupply in the corn market will continue to impact our business in the coming months," said Wang. "The company has been undertaking measures to optimize operations, to increase efficiency and to reduce operational costs. At the same time, the company is continuing its business development initiatives. We expect these measures, together with new business development, will help us get through this difficult period and restore the growth in the future."