American Lorain Corporation Reports 2011 Second Quarter Financial Results

- Company to Hold Conference Call Tuesday, August 16, 2011, at 8:00 a.m. ET -

News provided by

Aug 15, 2011, 04:21 ET

JUNAN COUNTY, China, Aug. 15, 2011 /PRNewswire-Asia-FirstCall/ -- American Lorain Corporation (NYSE Amex: ALN) ("American Lorain" or the "Company"), an international processed snack foods, convenience foods, and frozen foods company based in the Shandong Province, China, today announced financial results for its second quarter ended June 30, 2011.

Q2 2011 Operational Highlights

Each product segment increased by over 19% in sales year-over-year
Convenience food segment continued to grow as a percent of total revenue
Continued channel building efforts and progress such as sales to railway system

Q2 2011 Financial Highlights

Total revenues of $35.7 million, an increase of 22.3% year over year
Gross margins decreased slightly to 21.4%, compared to 23.0% year-over-year and 22.7% at 12/31/2010
Net income attributable to common stockholders of $3.3 million, up 21.8% year-over-year
Diluted earnings per share of $0.09

2011 Operations and Market Overview

Sales by categories of product consisted of the following for the three months ended June 30, 2011 and 2010:

Three months ended
*Category*		6/30/2011		6/30/2010	% Increase
Chestnut	$	17,719,636	$	14,868,240	19.2%
Convenience food		12,807,758		10,269,991	24.7%
Frozen food		5,199,255		4,080,083	27.4%
Total	$	35,726,650	$	29,218,314	22.3%

Categories of product as a percentage of sales for the three months ended June 30, 2011 and 2010:

Three months ended
*Category*	6/30/2011 % of Total Revenues	6/30/2010 % of Total Revenues	% Difference
Chestnut	49.6%	50.9%	(1.3%)
Convenience food	35.8%	35.1%	0.7%
Frozen food	14.6%	14.0%	0.6%
Total	100%	100%

American Lorain's Chairman and CEO, Mr. Si Chen, stated, "We are satisfied with the Company's performance in the second quarter, during which we have achieved solid growth in each of our three business lines despite various difficulties such as the general inflation. We believe the largest contributor to our growth in the coming months will be the continued expansion of our convenience foods segment, as well as the chestnut food segment as we enter the seasonally strong quarters. We believe the continuous focus on product quality and building our distribution channels and brand equity is key to the Company's success in a competitive landscape and will continue to execute on these strategies in the coming months."

2011 Second Quarter Financial Review

*American Lorain Corporation* *Selected Financial Statements in USD ($ in 000s)*
		3 months ended	3 months ended	% Increase
		6/30/2011	6/30/2010

Sales		$35,726,650	$29,218,314	22.3%
Cost of Revenues		($28,070,066)	($22,499,645)	24.8%
Gross Profit		$7,656,584	$6,718,669	14.0%
	Gross Profit Ratio	21.4%	23.0%
Income from operations		$4,974,450	$4,591,463	8.3%

Earnings before tax		$4,747,488	$3,729,113	27.3%

Net income attributable to common stockholders		$3,262,451	$2,679,613	21.8%

Diluted earnings per share		$0.09	$0.10	(10.0%)
Weighted average diluted shares outstanding		35,030,343	26,750,592	31.0%

The Company reported sales for the 2011 second quarter of $35.7 million, an increase of 22.3% compared to $29.2 million in the second quarter of 2010.
Gross profit increased14.0% to $7.7 million from $6.7 million in the prior-year period. Gross margin declined slightly to 21.4% for the three months ended June 30, 2011, from 23.0% for the prior-year period, due to inflation pressure. However, American Lorain expects that its margins will remain relatively stable and in the 20-25% range in the coming months.
Income from operations during the period was $5.0 million, an increase of 8.3% from $4.6 million reported in the prior year period. Operating margin for the 2011 second quarter was 13.9% compared with 15.7% in the prior year.
The Company had net income attributable to common shareholders for the second quarter of 2011 of $3.3 million, or $0.09 per diluted share based on 35.0 million diluted shares outstanding, compared to $2.7 million, or $0.10 per diluted share based on 26.8 million diluted shares outstanding in the prior-year period. The Company's net margin for the period was 9.1% compared with 9.2% in the prior year period.

Balance Sheet Highlights and Financial Position

*(in millions)*		6/30/2011		12/31/2010	% Increase
Cash and Cash Equivalents	$	9.6	$	12.7	(24.5%)
Restricted Cash		7.1		2.3	206.0%
Working Capital		74.8		57.4	30.3%
Total Liabilities		43.2		45.6	(5.4%)
Stockholders' Equity		138.7		129.3	7.3%

The Company had a book value per share at June 30, 2011 of $4.03.

Outlook for 2011

Mr. Chen concluded, "We are optimistic about the second half of 2011 based on what we are seeing thus far. The efforts of our management group in all three business segments are producing greater efficiencies in both the operating infrastructure and costs control which will help us as we continue to grow. Despite the current uncertainties weighing on the global economy, we remain optimistic about the outlook of our market growth in China and as well as abroad because of growing demand, improving brand recognition, and balanced supply. We will continue to execute on the Company's core strategies of driving growth through each of our business segments."

Conference Call

The Company will also discuss these results in a conference call tomorrow morning (August 16, 2011) at 8:00 a.m. ET.

Participant Dial-In Numbers:

(In the United States):	877-407-8031
(International):	201-689-8031

Webcast

The call will also be simultaneously broadcast over the Internet. To listen to the live webcast, please go to http://www.americanlorain.com and click on the conference call link, or go directly to: http://www.investorcalendar.com/IC/CEPage.asp?ID=165541.

Phone Replay Information

A recorded replay of the call will be available until 11:59 p.m. ET on August 19, 2011. Listeners may dial:

(In the United States):	877-660-6853
(International):	201-612-7415

The following replay passcodes are both required for playback:

Account #: 286
Conference ID #: 377216

About American Lorain Corporation

American Lorain Corporation products include chestnut products, convenience food products and frozen food products. The Company currently sells over 240 products to 26 provinces and administrative regions in China as well as to 42 foreign countries. The Company operates through its five direct and indirect subsidiaries and one leased factory located in China. For further information about American Lorain Corporation, please visit the Company's website at http://www.americanlorain.com.

Forward-Looking Statements

This press release contains certain "forward-looking statements" that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to, the Company's ability to obtain the necessary financing to continue and expand operations, to market its products in new markets and to offer products at competitive pricing, to attract and retain management, and to integrate and maintain technical information and management information systems, political and economic factors in the PRC, compliance requirement of laws and regulations of the PRC, the effects of currency policies and fluctuations, general economic conditions and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

For more information, please contact:
American Lorain Corporation
Mr. David She, CFO
+86-10 8411 3393
[email protected]
www.americanlorain.com

AMERICAN LORAIN CORPORATION CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDEDJUNE 30, 2011 and 2010 (Stated in US Dollars)
		Three months ended June 30,				Six months ended June 30,

		2011		2010		2011		2010

Net revenues	$	35,726,650	$	29,218,314	$	66,176,455	$	53,778,530
Cost of revenues		(28,070,066)		(22,499,645)		(51,744,961)		(41,335,771)
Gross profit	$	7,656,584	$	6,718,669	$	14,431,493	$	12,442,759

Operating expenses
Selling and marketing expenses		(1,088,768)		(1,194,996)		(2,451,454)		(2,567,348)
General and administrative expenses		(1,593,366)		(932,210)		(3,069,313)		(1,948,662)
		(2,682,134)		(2,127,206)		(5,520,767)		(4,516,010)

Operating income	$	4,974,450	$	4,591,463	$	8,910,727	$	7,926,749

Investment income		-		589		-		589
Government subsidy income		302,259		196,003		595,352		377,424
Interest and other income		102,372		8,901		149,457		130,982
Other expenses		(21,483)		(44,714)		(181,055)		(72,237)
Interest expense		(610,111)		(1,023,129)		(1,263,235)		(1,943,553)

Earnings before tax	$	4,747,488	$	3,729,113	$	8,211,247	$	6,419,954

Income tax		(1,277,553)		(857,604)		(2,173,421)		(1,529,596)

Net income	$	3,469,935	$	2,871,509	$	6,037,826	$	4,890,358

Other comprehensive income:
Foreign currency translation gain		1,875,108		400,424		3,107,991		419,885

Comprehensive income	$	5,345,043	$	3,271,933	$	9,145,817	$	5,310,243

Net income attributable to:
-Common Stockholders	$	3,262,451	$	2,679,613	$	5,688,739	$	4,540,144
-Non-controlling Interest		207,484		191,896		349,087		350,214
Net income	$	3,469,935	$	2,871,509	$	6,037,826	$	4,890,358


Earnings per share
- Basic	$	0.09	$	0.10	$	0.17	$	0.17
- Diluted	$	0.09	$	0.10	$	0.16	$	0.17

Weighted average shares outstanding
- Basic		34,427,582		26,075,413		34,427,582		26,075,413
- Diluted		35,030,343		26,750,592		35,030,343		26,750,592

AMERICAN LORAIN CORPORATION CONSOLIDATED BALANCE SHEETS AT JUNE 30, 2011 AND DECEMBER 31, 2010
				(Audited)
		At June 30,		At December 31,
ASSETS		2011		2010
Current assets
Cash and cash equivalents	$	9,605,538	$	12,730,626
Restricted cash		7,064,127		2,308,898
Short-term investment		6,769,421		9,447,585
Trade accounts receivable		27,002,950		33,226,612
Other receivables		1,841,750		1,492,850
Inventories		41,097,859		29,807,198
Advance to suppliers		8,027,308		7,744,976
Prepaid expenses and taxes		467,407		434,061
Deferred tax asset		106,100		103,713
Security deposits and other Assets		628,998		693,858
Total current assets	$	102,611,458	$	97,990,377

Non-current assets
Investment		464,181		-
Property, plant and equipment, net		73,771,569		72,095,007
Land use rights, net		4,911,645		4,877,438
Deposit		169,911		20,297
TOTAL ASSETS	$	181,928,763	$	174,983,119

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term bank loans	$	16,428,735	$	25,164,469
Long-term debt – current portion		56,089		218,935
Notes payable		3,868,173		4,249,977
Accounts payable		4,091,972		6,284,532
Taxes payables		1,357,095		3,266,502
Accrued liabilities and other payables		1,463,710		1,335,947
Customers deposits		586,415		89,370
Total current liabilities	$	27,852,188	$	40,609,732

Long-term liabilities
Long-term debt		15,330,667		5,030,930

TOTAL LIABILITIES	$	43,182,855	$	45,640,662



				(Audited)
		At June 30,		At December 31,
		2011		2010
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2010 and 2009, respectively				-
Common stock, $0.001 par value, 200,000,000 shares authorized; 34,419,709 and 30,240,202 shares issued and outstanding as of December 31, 2010 and 2009, respectively		34,445		34,420
Additional paid-in capital		52,676,854		52,371,481
Statutory reserves		12,069,925		11,340,739
Retained earnings		53,647,928		48,688,375
Accumulated other comprehensive income		12,535,972		9,475,745
Non-controlling interests		7,780,784		7,431,697

TOTAL STOCKHOLDER'S EQUITY	$	138,745,907	$	129,342,457

TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY	$	181,928,763	$	174,983,119

AMERICAN LORAIN CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010 (Stated in US Dollars)
		Three months ended June 30,				Six months ended June 30,
		2011		2010		2011		2010
Cash flows from operating activities
Net income	$	3,469,935	$	2,871,509	$	6,037,826	$	4,890,358
Stock and share based compensation		131,671		205,943		305,373		454,949
Depreciation		669,969		322,416		1,141,935		687,985
Amortization		49,549		33,341		94,435		69,061
Write down/(gain) on short-term investment		(92,673)		-		(47,763)		-
(Increase)/decrease in accounts & other receivables		(5,627,103)		4,205,909		6,371,808		8,294,930
(Increase)/decrease in inventories		(2,366,929)		1,798,055		(11,290,660)		(7,675,643)
(Increase)/decrease in prepayment		(77,666)		972,209		(315,679)		734,094
(Increase)/decrease in deferred tax asset		(1,411)				(2,388)		-
Increase/(decrease) in accounts and other payables		(1,583,873)		(1,648,161)		(3,974,205)		(1,950,117)
Net cash (used in)/provided by operating activities		(5,428,531)		8,761,221		(1,679,318)		5,505,617

Cash flows from investing activities
Proceeds from short-term investments		467,879		-		2,166,220		22,227
(Increase)/decrease in restricted cash		(2,205,347)		376,613		(4,755,229)		558,448
Payment of construction in progress		(90,840)				(471,105)
Payment of land use rights		(76,740)		(18,318)		(128,642)		(33,205)
Payments for purchase of equipment & plant		(1,567,871)		(9,618,218)		(2,347,391)		(10,045,753)
Decrease (increase) in deposit		(154,034)		-		(84,754)		-
Net cash used in investing activities		(3,626,952)		(9,259,923)		(5,620,902)		(9,498,283)

Cash flows from financing activities
Bank borrowings		6,733,544		5,297,856		18,183,012		23,151,602
Repayment of bank loans		(9,406,948)		(2,900,729)		(20,980,396)		(20,861,829)
Notes payable		763,347		-		3,816,736		-
Issue of common stock		25		-		25		-
Net cash provided by/(used in) financing activities	$	(1,910,033)	$	2,397,127	$	1,019,377	$	2,289,773

Net Increase/(decrease) of Cash and Cash Equivalents		(10,965,515)		1,898,425		(6,280,842)		(1,702,893)

Effect of foreign currency translation on cash
and cash equivalents		1,967,781		(89,298)		3,155,754		(69,848)

Cash and cash equivalents–beginning of period/year		18,603,272		8,529,664		12,730,626		12,111,532

Cash and cash equivalents–end of period/year	$	9,605,538	$	10,338,791	$	9,605,538	$	10,338,791

		Three months ended June 30,				Six months ended June 30,
		2011		2010		2011		2010

Supplementary cash flow information:
Interest received	$	7,879	$	3,998	$	10,355	$	6,802
Interest paid	$	610,675	$	1,018,530	$	1,263,799	$	1,938,954
Income taxes paid	$	1,816,289	$	649,208	$	3,845,257	$	2,489,131