August 10, 2010 / 11:35 AM / in 7 years

UPDATE 1-Migao's profit slips as taxes rise

* Fiscal Q1 EPS C$0.17 vs C$0.20 a year ago

* Revenue up 12.6 pct to C$66.3 mln

TORONTO, Aug 10 (Reuters) - Specialty fertilizer maker Migao Corp MGO.TO said fiscal first-quarter profit fell as some of its units that previously operated under tax-free or tax-reduced programs in China are now facing an increased tax burden.

Net income in the quarter, ended June 30, fell to C$8.9 million, or 17 Canadian cents a share, from C$9.6 million, or 20 Canadian cents a share, a year earlier.

The Toronto-listed company, which operates specialty potash fertilizer plants across China, said revenue rose 12.6 percent to C$66.3 million as shipment volumes increased.

The company said its gross profit margin in the quarter was 26.4 percent of revenue, ahead of the targeted range of 22 percent to 24 percent.

Migao said the recent flooding in China has not directly impacted the company but could mean some minor transportation delays on some rail lines.

Migao produces two specialty potash-based fertilizers: potassium nitrate and potassium sulphate. These two products account for the bulk of its revenue, with the remainder coming from by-products such as ammonium chloride and hydrochloric acid.

The company’s specialty fertilizer products target tobacco crops and fast-growing fruit and vegetable markets in China. (Reporting by Euan Rocha; editing by John Wallace)

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