NEW YORK, Aug. 14 /Xinhua-PRNewswire-FirstCall/ -- Tiens Biotech Group (USA), Inc. (''the Company'' or ''Tiens''), , http://www.tiens-bio.com , announced financial results for the second quarter ended June 30, 2007.
Revenue for both the second quarter of 2007 and the second quarter of 2006 was $14.3 million.
Net income for the second quarter of 2007 was $5.1 million, compared to net income of $5.2 million for the second quarter of 2006. Earnings per share for both the second quarter of 2007 and 2006 were $0.07.
Revenue for the six months ended June 30, 2007 was $30.6 million, compared to $31.0 million for the six months ended June 30, 2006.
Net income for the six months ended June 30, 2007 was $11.6 million, compared to net income of $12.0 million for the first six months of 2006. Earnings per share for six months ended June 30, 2007 were $0.16 compared to $0.17 for the first six months of 2007.
Revenue by Region
For the second quarter of 2007, revenue in China was $5.1 million, an increase of 14.8% compared to the same period in 2006.
In China, Tiens sells its products to Tianjin Tianshi Biological Engineering Co., Ltd. (''Tianshi Engineering''), an affiliated Chinese company. In order to qualify for a direct selling license in China, Tianshi Engineering is required to produce a part of the products that it sells in China. As a result, in 2006, Tiens began to sell semi-finished products to Tianshi Engineering, which jointly shares licenses with Tiens to produce, manufacture and sell the products. The semi-finished products, which Tiens is now exclusively selling in China, have lower sales prices than the finished products Tiens had previously sold to Tianshi Engineering.
During the first quarter of 2006, Tiens had significant amounts of finished products in inventory. As previously mentioned above, semi-finished products have lower sales prices than finished products Tiens had previously sold to Tianshi Engineering. By the second quarter of 2006, most of the finished products in inventory had been sold. Therefore, the increase between the second quarters of 2007 and 2006 reflects a growth in sales of our products in China on the basis of comparing sales of semi-finished products in the second quarters of both 2006 and 2007. The increase in the strength of the Chinese renminbi (RMB) against the dollar accounted for 43% of the $662,905 increase in revenue in the second quarter of 2007 compared to the same period in 2006.
For the six months ended June 30, 2007, revenue in China was $12.3 million, a decrease of 5.3% compared to the first half of 2006. Management believes that sales to China have been negatively impacted by the following factors:
-- continued consumer uncertainty in China regarding the impact of
recently enacted direct selling regulations and uncertainty regarding
the timing of the direct selling license application process and
approval; and
-- increased government and media scrutiny on the direct selling industry,
particularly following last year's publication of the new direct
selling regulations.
The application of Tianshi Engineering for a direct selling license in China is still pending.
For the second quarter of 2007, international revenue was $9.2 million, a decrease of 6.5% compared to the same period in 2006. The decrease was primarily due to a decrease in sales in Africa. For the six months ended June 30, 2007, international revenue was $18.2 million, an increase of 1.3% compared to the same period in 2006.
Other Highlights
Cost of sales for the second quarter of 2007 increased to $4.5 million, or 15.9%, compared to $3.8 million for the comparable period in 2006. This increase was primarily due to an increase in the strength of the renminbi against the dollar. Cost of sales for the six months ended June 30, 2007 was $8.9 million, compared to $8.6 million for the same period in 2006.
Gross profit for the second quarter of 2007 was $9.9 million compared to $10.5 million for the same period in 2006. The gross profit margin for the second quarter of 2007 was 68.9%, compared to 73.1% for the same period in 2006. Gross profit for the six months ended June 30, 2007 was $21.7 million, compared to $22.4 million for the same period in 2006. The gross profit margin for the six months ended June 30, 2007 was 70.9%, compared to 72.1% for the same period in 2006.
Selling, general and administrative expenses remained flat at $3.3 million for the second quarter of 2007. Increases in salary and depreciation expenses were offset by a decrease in research in development expenses. The selling, general and administrative expenses as a percentage of sales was 23.2% for the second quarter of 2007 compared to 22.9% for the same period in 2006. Selling, general and administrative expenses was $6.6 million for the six months ended June 30, 2007, compared to $5.8 million for the same period in 2006, an increase of 12.2%. The increase was primarily due to an increase in salary and depreciation expenses. The selling and administrative expense as a percentage of sales was 21.4% for the six months ended June 30, 2007 compared to 18.8% for the same period in 2006.
Tiens continues to strive to expand its market share in China through the branches, chain stores, and Chinese affiliated companies of Tianshi Engineering. To enhance its position in this competitive market, Tianshi Engineering continues to increase its marketing activities in China, including opening additional branches across China, developing a nation-wide advertising campaign, encouraging media coverage and strengthening the Tiens brand.
As of June 30 2007, Tiens had $107.0 million of retained earnings and total shareholders' equity of $134.4 million.
Jinyuan Li, Chairman, President and CEO of Tiens, said, ''Tiens generated an increase in domestic revenue in the second quarter while maintaining consistent overall revenue despite the challenging direct selling regulatory environment in China. In addition, Tiens generated an increase in net results compared to the first quarter of 2007. We are committed to achieving future growth and enhanced shareholder value and remain positive in our long-term outlook for the Company.''
For more information please visit:http://www.money.cnn.com/news/newsfeeds/articles/prnewswire/CNTU00114082007-1.htm
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