American Dairy Expecting 100% Increase in Year-on-Year Infant Formula Revenues

American Dairy expects second quarter 2009 revenue to increase by approximately 10% year over year to approximately $41.0 million from $37.3 million, the revenue reported in the second quarter of 2008 from continuing operations.

14/07/09 American Dairy, Inc., one of the leading producers and distributors of premium infant formula, milk powder and soybean, rice and walnut products in China, provided preliminary second quarter 2009 revenue results, preliminary full year 2009 revenue guidance and a business update.

American Dairy expects second quarter 2009 revenue to increase by approximately 10% year over year to approximately $41.0 million from $37.3 million, the revenue reported in the second quarter of 2008 from continuing operations. The corresponding quarterly revenue numbers from continuing operations for the third and fourth quarters of 2008 were $37.2 million and $79.6 million, respectively. More importantly, sales in the Company's core infant formula business in the second quarter of 2009 should increase by more than 100% year over year. The Company also provided guidance for full year 2009 revenues of $330-$360 million, representing an annual growth rate of approximately 80% from 2008.

Mr. Jonathan H. Chou, the Company's Chief Financial Officer comments, "Second quarter 2009 sales performance continues to be strong notwithstanding the run down in inventories in the sales channel caused by newly-mandated SFDA safety disclosures on all food packaging in China to bring them more in line with international standards. In addition, China Investment Corp. (CIC) data recently reported American Dairy's Feihe brands market share at approximately 6.4% in China's infant formula market, as of May 2009."

Mr. Leng You-Bin, the Company's Chief Executive Officer states, "Our focus in the coming years is to become a top-tier producer of branded infant milk formula products. I believe we have only just begun to recognize growth in the infant milk formula market, and we recently made investments to help us achieve these market share goals."

Mr. Liu Hua, Vice Chairman explains, "We intend to achieve this through continued investment in brand awareness of our Feihe brand particularly in Tier 1 cities and other parts of China, while strengthening our existing, dominant presence in the North and East of the country. We will increase our point of sales presence to at least 100,000 retail locations throughout China, up from the 80,000 locations as of today and compared to 50,000 locations at the beginning of 2009. For example, we increased our distributor base to over 550 from 450 at the start of the year. We increased our sales force by 50% in six months to 1,500 sales people today compared with 1,000 at the start of the year. We also invested in additional milk supply, which we control for quality purposes, and now have 10,000 Australian Holstein milk producing cows, up from 8,000 at the start of the year. We will aggressively manage all of these efforts to drive our market share higher over time, and ultimately create one of the leading infant formula brands in China."