Tiens Biotech Group (USA), Inc. (the "Company" or "Tiens", NYSE AlternextUS: TBV), http://www.tiens-bio.com , today announced record financial results for the twelve months ended December 31, 2008.
For the twelve months ended December 31, 2008, revenue was $77.2 million, an increase of 40.7% compared to $54.9 million for the twelve months ended December 31, 2007.
Net income for the twelve months ended December 31, 2008 was $27.7 million, or $0.39 per share, compared to $17.9 million, or $0.25 per share for the twelve months ended December 31, 2007.
The increase in revenue for 2008, compared to 2007, reflects an increase in sales for both China and internationally. Tiens' strong sales growth in China was due to increased marketing efforts during 2008. In addition, during the third quarter of 2008, Tianshi Engineering, the affiliated company which markets and sells Tiens' products in China, announced plans to increase the prices of its products beginning in October 2008. Tiens believes this announcement prompted customers to stock up on certain products. The price increase of Tianshi Engineering products will not affect the price at which Tiens sells its products to Tianshi Engineering.
For the twelve months ended December 31, 2008, revenue in China was $33.7 million, a 50% increase compared to $22.5 million for the same period in 2007.
Tiens' increase in international sales reflects a sharp increase in sales to Russia and Indonesia during 2008. In addition, beginning in the second quarter of 2008, certain export restrictions imposed in 2007 by the Administration for Quality Supervision, Inspection and Quarantine (AQSIQ) of the Chinese government were reduced, and the campaign ended at the end of 2008.
Cost of sales were $24.9 million in 2008 compared to $16.5 million in 2007, an increase of 50.5%. This increase was primarily due to the corresponding increase in sales revenue. Cost of sales increased at a higher rate than revenue because of increases in the costs of raw materials and packing materials, and an increase in the portion of the products we sold in 2008 bearing a higher cost of production, relative to our other products, than in 2007.
Gross profit increased by 36.5% to $52.4 million in 2008, compared to $38.4 million in 2007. The gross profit margin for 2008 was 67.8% compared to 69.9% in 2007. This decrease reflects an increase in the costs of raw materials and packing materials, and an increase in the portion of the products Tiens sold in 2008 bearing a higher cost of production, relative to other products, than in 2007.
Selling, general and administrative expenses were $18.6 million in 2008, compared to $14.9 million in 2007, an increase of 24.5%. The increase was primarily due to increases in salaries and insurance costs, allowance for bad debt, research and development, advertising expenses and house reserve funds. Selling and administrative expenses as a percentage of sales decreased to 24.1% in 2008 from 27.2% in 2007 because of the increase in sales.
In China, Tiens sells its products to Tianshi Engineering. 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. The application of Tianshi Engineering for a direct selling license in China is still pending.
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 December 31, 2008, Tiens had $106.3 million of retained earnings and total shareholders' equity of $148.9 million.
Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are pleased to report record results for 2008 which reflect both a significant increase in our domestic and international revenue. We have generated sequential growth since the first quarter of 2008 and are optimistic that our international sales will further increase as additional export restrictions are lifted. We are committed to gaining greater market share in China, continuing to expand our growing international customer base, and further implementing our strategic plans for long term domestic and international growth."
About Tiens Biotech Group (USA), Inc. http://www.tiens-bio.com
Tiens Biotech Group (USA), Inc. (NYSE AlternextUS: TBV) conducts its business operations from Tianjin, People's Republic of China. Tiens primarily engages in the research, development, manufacturing, and marketing of nutrition supplement products, including wellness products and dietary supplements.
Tiens derives its revenues principally from product sales to affiliated companies in China and internationally in 46 countries. Since its establishment, Tiens has developed and produced 37 nutrition supplements, which include wellness products and dietary supplements. Tiens develops its products at its own product research and development center, which employs highly qualified professionals in the fields of pharmacology, biology, chemistry and fine chemistry. Tiens has obtained all required certificates and approvals from government regulatory agencies to manufacture and sell its products in China.
In China, Tiens conducts the marketing and sales of its products through its affiliated company, Tianshi Engineering. Tianshi Engineering markets and sells Tiens' products in China through chain stores, domestic affiliated companies, and its 98 branches. Outside of China, Tiens sells its products to affiliated companies in 46 countries who in turn sell through an extensive direct sales force, or multi-level marketing sales force. The Company's direct sales marketing program is subject to governmental regulation in each of these countries.
Certain statements in this press release constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Such forward-looking statements are not necessarily indicative of future financial results, and may involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. The Company's future operating results are dependent upon many factors, including but not limited to: (i) the Company's ability to obtain sufficient capital or a strategic business arrangement to fund its expansion plans; (ii) the Company's ability to build the management and human resources and infrastructure necessary to support the growth of its business; (iii) competitive factors and developments beyond the Company's control; (iv) whether the Company continues to experience delays in the export clearance of its products; (v) whether Tianshi Engineering, the Company's affiliate which sells its products in China, obtains a direct selling license in China; and (vi) other risk factors discussed in the Company's periodic filings with the Securities and Exchange Commission which are available for review at http://www.sec.gov under "Search for Company Filings."