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China Linen's revenues increase 82% to $16 mn
16
Aug '11
China Linen Textile Industry Ltd, one of China's leading linen fabric and linen yarn producers and exporters, announced financial results for the second quarter ended June 30, 2011.

Mr. Gao Ren, Chairman and CEO of China Linen, commented: "I am pleased to report that the second quarter of this year was marked by substantial growth in revenue and net income compared to the same period last year, resulting from sales volume increases and price improvements of both linen fabric and linen yarn. The integration of Lanxi Tianxianfang Linen Co. is complete and we continue to realize cost saving benefits from this acquisition.

Through the addition of a bleaching factory and our upgraded linen yarn dyeing facility, we move closer to our long term goal of becoming a fully integrated linen producer, which should further drive margin expansion and allow us to offer a full range of linen products and services to our customers. International sales remained robust, accounting for 58% of revenues in the second quarter, as fashion trends across Europe and Asia continued to favor pure linen products and accessories, and consumers increasingly recognized the quality and value of these products," Mr. Gao concluded.

Three Months Ended June 30, 2011 Financial Results

Revenue for the three months ended June 30, 2011 totaled $16.0 million, up approximately 82% from $8.8 million for the three months ended June 30, 2010. The increase in revenue was primarily attributable to increased sales volume of both linen fabric and linen yarn due to new customers and new products, and increased sales prices. Gross profit for the second quarter of 2011 was $5.9 million, up 116% from $2.7 million from the second quarter of 2010. The increase in gross profit was primarily driven by sales growth. Gross margin for the three months ended June 30, 2011 was 36.5%, an increase of 572 basis points from 30.8% for the three months ended June 30, 2010, mainly due to sales price increases and the ability to efficiently control production costs.

Operating expenses increased 151% to $1.1 million in the three months ended June 30, 2011 from $0.4 million in the same period of 2010, mainly due to an increase in sales expenses, research and development costs, and depreciation and amortization in connection with the increase of fixed assets.

Operating income increased 109% to $4.8 million for the second quarter of 2011 from $2.3 million in the same period of 2010, while operating margin increased 389 basis points to 29.8%.

Net income was $3.5 million for the three months ended June 30, 2011 as compared to $1.9 million for the three months ended June 30, 2010, representing an increase of approximately 80%, representing diluted earnings per share of $0.51, compared to $0.33 in the same period of 2010, an increase of 51%.

Revenue for the six months ended June 30, 2011 totaled $31.8 million, an increase of approximately 81% from $17.6 million for the six months ended June 30, 2010. The increase in revenue was primarily attributable to increased sales volume of both linen fabric and linen yarn due to new customers and new products, and increased sales prices. Gross profit for the six months ended June 30, 2011 was $11.5 million, up 112% from $5.4 million from the first half of 2010. Gross margin for the six months ended June 30, 2011 was 36.2 %, an increase of 540 basis points from 30.8% for the six months ended June 30, 2010, primarily attributable to sales price increases and the ability to efficiently control production costs.

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