April 21, 2009

American Dairy Inc. has reported that total comprehensive income was US$30.09 million, or US$0.97 per diluted share, for fiscal 2008, compared to US$17.59 million, or US$0.48 per diluted share, for fiscal 2007.

The company is a subsidiary of Feihe Dairy and is also one of the leading producers and distributors of premium infant formula, milk powder and soy, rice and walnut products in China.

For fiscal 2008, sales increased by 17.9 percent to US$193.19 million, compared to US$163.89 million in 2007, while gross profit increased 4.9 percent to US$76.01 million from US$72.47 million. However, gross margin in 2008 was lower at 39.3 percent, compared to 44.2 percent in 2007.

In 2008, the company began distributing raw milk powder to beverage manufacturers and other wholesalers for use in blended beverage products. As a result, sales of raw milk powder increased 70.8 percent to US$60.8 million in 2008, contributing to 31.4 percent of total sales compared to only 21.7 percent of total sales in 2007.

Cost of goods sold increased US$25.8 million, or 28.2 percent, to US$117.2 million in 2008 from US$91.4 million in 2007, due to an increase of US$32.9 million, or 81.2 percent, in raw milk powder purchased from third parties for processing and distribution, as well as a general increase in costs resulting from economic conditions.

Chief Executive Officer Leng You-Bin said the company's growth strategy focused increasingly on driving premium-branded infant formula sales which carries gross margins of 50 percent.