News blog

Sorbic International

• BY: Andrew Hore |
• POSTED: 17/06/2013 |

Sorbic acid and potassium sorbate producer Sorbic International made a profit at the interim stage but it has still not made a decision about where a new factory will be sited.

China-based Sorbic reported reduced sales in China and other markets, with the US the only market where sales were increased. Further US growth may depend on investment in additional capacity.

Revenues declined from £8.29m to £7.05m, while a loss of £76,000 was turned into a profit of £424,000 – mainly due to a £328,000 unrealised foreign exchange gain. Plant maintenance reduced production volumes bit lower costs meant that margins improved. Net cash was £2.89m at the end of March 2013, although there are net directors’ loans of £2.47m. The convertible loan notes held by fund managers have been extended until August 2014. The conversion price is 9p a share.

At 8.62p a share, Sorbic is valued at £4.93m. NAV is £17.3m.

Sorbic has agreed around £5m of compensation from the Chinese authorities for moving its Inner Mongolian plant due to the re-zoning of land but the final negotiations have not been completed. This is because there is an alternative of relocating the original facility in Linyi City, Shangdong Province to a larger site. In this case the building of a new facility would be financed by the Linyi authorities.

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFJune2013_45.pdf