Tiens Biotech Group's revenues for 2009 decline

Apr 5 2010

Tiens Biotech Group (USA), Inc. (the "Company" or "Tiens") (NYSE Amex: TBV), http://www.tiens-bio.com , today announced financial results for the year ended December 31, 2009.

For 2009, revenue was $62.0 million, compared to $77.2 million for 2008.

Net income for 2009 was $24.8 million, or $0.33 per share, compared to $30.0 million, or $0.39 per share for 2008.

Results for 2009 reflect, in part, a decrease in revenue in China to $27.2 million from $33.7 million for 2008. The revenue decrease is attributed, in part, to a decline in domestic distributors' demand after stocking up on products in 2008. During the third quarter of 2008, Tianshi Engineering announced plans to increase prices of its products which prompted customers to stock up on certain products. Consumer product demand decreases in the first and third quarters of 2009 were offset by some increases in sales during the second and fourth quarters of 2009, which reflect marketing efforts during those periods.

For 2009, international revenue was $34.7 million compared to $43.5 million for 2008.

The decrease in international revenue reflects decreases in sales in the Asia-Pacific and Europe-Asia regions and a general weakness in the global economy. During 2008, China's Administration of Quality Supervision, Inspection and Quarantine carried out a national campaign against unsafe food and substandard products resulting in a general slow-down and backlog of export clearances for Chinese food products. While the lifting of the regulations in late 2008 resulted in overseas customers beginning to purchase more products during the first two quarters of 2009, results for the year reflect the impact of the aforementioned general global economic weakness.

Other Highlights

Cost of sales were $20.2 million in 2009, compared to $24.9 million in 2008. The decrease was primarily due to the corresponding decrease in sales. Cost of sales decreased at a lower rate than revenue, primarily due to fixed costs, which do not increase or decrease in line with sales.

Gross profit was $41.8 million in 2009, compared to $52.4 million in 2008. The gross profit margin for 2009 was 67.5% compared to 67.8% in 2008.

Selling, general and administrative expenses were $16.0 million in 2009 compared to $18.6 million in 2008. The decrease was primarily due to decreases in allowance for bad debt, and salary, advertising and research and development expenses. Selling, general and administrative expenses as a percentage of sales increased to 25.8% from 24.1% primarily due to fixed costs, which do not increase or decrease in line with sales.

As of December 31, 2009, Tiens had $126.4 million of retained earnings and total shareholders' equity of $185.8 million.

Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are steadfast in our commitment to building greater market share in China, expanding our international customer base, and further implementing our strategic plans for long-term domestic and international growth. We remain confident that domestic sales will return to, and potentially exceed, previous levels, as distributors begin to replenish their stock of our products. In addition, we maintain this same positive sentiment regarding international sales, which we expect will benefit from the removal of export restrictions and gradual economic improvement."