Tiens Biotech first-quarter revenues decrease to $11.4 million

May 17 2010

Tiens Biotech Group (USA), Inc. (the "Company" or "Tiens", NYSE AMEX: TBV), http://www.tiens-bio.com , today announced financial results for the first quarter ended March 31, 2010.

Revenue for the first quarter of 2010 was $11.4 million, compared to $18.2 million for the first quarter of 2009.

Net income for the first quarter of 2010 was $3.6 million, or $0.05 per share, compared to $9.0 million, or $0.12 per share for 2009.

Revenue in China increased to $6.8 million for the first quarter of 2010, compared to $2.7 million for the same period in 2009. The Company's 2010 first quarter sales in China was, however, comparable to the 2009 average quarterly sales in China of $6.8 million. Management believes that Tianshi Engineering's announced plans to increase prices of its products during the third quarter of 2008 prompted customers to stock up on certain products in late 2008, thereby decreasing customer demand in the first quarter of 2009. Revenue in China for the first quarter of 2009 was lower than any other quarter in 2009.

Results for the first quarter of 2010 reflect a decrease in international revenue to $4.6 million, from $15.5 million for the same period in 2009 and was lower than the 2009 quarterly average revenue of $8.7 million. Management believes that uneven bulk ordering significantly contributed to the decrease as some international distributors purchase products only once or twice during each year. The decrease is also due to declined sales to Indonesia and Vietnam. In the first two quarters of 2009, customers in Indonesia and Vietnam significantly stocked up on the Company's products, which depressed subsequent sales in the latter half of 2009 and through the first quarter of 2010. Sales declines in these regions also reflect the recent adjustment by the Company's international distributors of the direct selling rules for customers in these regions, which is expected to increase long-term sales but negatively affect near-term sales.

Additionally, during 2008, China's Administration of Quality Supervision, Inspection and Quarantine ("AQSIQ") carried out a national campaign against unsafe food and substandard products, which brought on a general slow-down and backlog of export clearances for Chinese food products. Upon the lifting of the regulations, overseas affiliated companies began to purchase more products, thereby increasing sales in the first quarter of 2009.

Other Highlights

Cost of sales for the first quarter of 2010 were $3.4 million, compared to $5.7 million for the first quarter of 2009. This decrease was mainly due to the corresponding decrease in sales for the period. Cost of sales decreased at a higher rate than revenue, which is mainly attributable to the increased sales percentage of certain products, such as Cordyceps Capsules, which have a higher profit margin.

Gross profit for the first quarter of 2010 was $8.0 million, compared to $12.5 million for the first quarter of 2009. The gross profit margin for the first quarter of 2010 was 69.8%, compared to 68.6% for the first quarter of 2009.

Selling, general and administrative expenses were $3.5 million for the first quarter of 2010, compared to $3.1 million for first quarter of 2009. The increase was primarily due to increases in bad debts. Selling and administrative expenses as a percentage of sales was 30.7% for the first quarter of 2010, compared to 17.2% for the first quarter of 2009, primarily due to fixed costs which do not increase or decrease in line with sales.

As of March 31, 2010, Tiens had $129.6 million of retained earnings and total shareholders' equity of $179.3 million.

Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are pleased to report an increase in domestic sales. We are confident that both international and domestic sales will return to, and potentially exceed, previous levels as customers and distributors begin to replenish stored up products. We remain committed 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."

SOURCE Tiens Biotech Group (USA), Inc.