American Dairy Reports Q2 Net Income Increase of 800%

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American Dairy Inc., (OTCBB: ADIY ) one of the leading producers and distributors of milk powder and soy bean products in China, today announces that it has filed its Form 10-QSB with the SEC.

American Dairy Inc., (OTCBB: ADIY ) one of the leading producers and distributors of milk powder and soy bean products in China, today announces that it has filed its Form 10-QSB with the SEC.

Net income increased by 800% from $160,576 during the three months ended June 30, 2003, to $1,445,280 for the comparable period in 2004. Components of sales and expenses resulting in this increase in net income are attributed primarily to the following factors:

1.    51% quarter-on-quarter increase in sales

2.    106% quarter-on-quarter increase in gross profit margins. Gross profit margin improved to 52% for the quarter ended June 30, 2004 compared to 39% for the same corresponding quarter in 2003.

3.    49% quarter-on-quarter increase in distribution expenses to $2,100,427 Variance in selling expenses was principally attributable to the increases in advertisements, salaries and allowances, and supermarket display and consignment.

Sales revenues increased by $3,255,161, or 51% quarter-on-quarter to $9,620,155 for the quarter ended June 30, 2004, compared to the corresponding quarter in 2003 of $6,364,994.

EPS for Q2 2004 = $0.12 per share.

EPS for Q1 2004 = $0.10 per share.

EPS Total for 6 months = $0.22 per share ended June, 2004    

The company projected sales of $48,000,000 and net income before taxes of $6,000,000 or $0.48 per share by year end 2004.

“Our extensive and rapidly growing sales network has enhanced the distribution of Feihe Dairy’s products to new provinces all over China. The popularity of the ‘Feihe’ trademark is reaching even some of the most remote areas,” explained Leng You-Bin, CEO of American Dairy Inc. “Our continual strife to be the leading Chinese brand has brought us to where we are today.

“With government encouragement and support, especially for private initiatives in the industry, dairy production in China has developed steadily since 1979. Dairy farmers are emerging in large numbers; according to statistics collated by the CGBCWBDC, dairy cows in Heilongjiang Province in 1991 amounted to 618 000, an increase of 261 percent over 1983 and almost four times more than in 1982.” (1)

Certain of the statements made herein constitute forward-looking statements that involve risks and uncertainties. In such instances, actual results could differ materially as a result of a variety of factors including the risks associated with the effect of changing economic conditions at home and abroad, variations in cash flow, reliance on collaborative retail partners, and on new product development, variations in new product and service development, risks associated with rapid technological change, and potential of introduced or undetected flaws and defects in products and services and other risk factors detailed in forms filed with the Securities and Exchange Commission from time to time.

(1)http://www.fao.org/docrep/V0600T/v0600T07.htm

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