YaSheng Group Announces First-Quarter 2011 Results

REDWOOD CITY, CA--(Marketwire - May 18, 2011) - Yasheng Group (OTCQB: YHGG) (XETRA: YSF), a high-growth diversified China-based agricultural company with US headquarters in California, today announced results for the first quarter ended March 31, 2011.

 ------------------------------------------------------------------------- 1Q11 1Q10 Change ------------------------------------------------------------------------- Revenues $195.3M $168.3M +16% ------------------------------------------------------------------------- Net Income $19.8M $17.1M +16% ------------------------------------------------------------------------- EPS $.13 $.11 +18% ------------------------------------------------------------------------- 

Revenues

Our sales are generated primarily from our farming operations and related side line products in China. Net sales for the three months ended March 31, 2011 increased $27 million or 16.05% to $195.3 million as compared to $168.3 million for the three months ended March 31, 2010.

The overall increases in net sales are primarily a result of the increasing prices for agricultural products attributable to the general economics in China. We also benefited from our expanded marketing network which covers more provinces with more distributors and direct clients. In addition, our traditional holiday season, the Chinese Spring Festival (“CSF”) significantly contributed to the increase in net sales although the first quarter for the Company is an offseason quarter in total.

Cost of Goods Sold

Our cost of goods sold consists of direct production costs such as raw materials, direct labor, overhead and miscellaneous other supplies. Cost of goods sold for the period increased $24 million or 16.03% to $173.9 million from $149.88 million for the prior-year period. Costs were in line with sales due to continued heightened focus on cost controls exercised throughout production, the increase in costs is mainly due to the rise in the price of materials.

Gross Profit and Gross Margin

Our gross profit for the period increased $3.0 million or 16.3% to $21.4 million from $18.4 million for the prior-year period. The improved margin was primarily due to the surge in product price. In addition, the CSF had a positive impact on gross profit margin.

Sales and Marketing Expenses

Our sales and marketing expenses for the period increased $28,322 or 8.71% to $353,565 as compared to $325,243 in the prior-year period. The increase in these expenses is primarily due to more promotional activities held during the CSF.

General and Administrative Expenses

Our general and administrative expenses for the period increased $124,167 or 16.05% to $897,992 from $773,825 for the prior-year period. The increase is primarily due to the price hike related to the general economics in China. It is also a result of the increase in the employee welfare and public relation fees in preparation for the CSF.

Interest Expenses and Other Income

Our interest expense for the period increased $17,653 or 2.83% to $640,665 as compared to $623,012 in the prior-year period. Our other income for the period decreased $165,098 or 39.63% to $251,496 as compared to $416,594 in the prior-year period.

Net Income

Our net income for the period grew to $19.8 million or $.13 per basic share from $17.1 million or $.11 per basic share for the prior-year period.

Chairman Zhou Changsheng commented, “Our solid financial performance for the first quarter was mostly the result of price increases in the agricultural sector, which were a result of the continued expansion of the Chinese economy. The Chinese Spring Festival offered a welcome marketing and sales opportunity for our premium products during the quarter. In addition, we believe that our continued strong execution, expanding distribution network, our high-quality products, which increasingly carry our Yasheng brand, and the dedicated work of our management and employees contributed greatly to our company’s success. I am confident that we are operating a sustainable business that will be able to capture more of the economic growth in China in coming quarters.”

Yasheng Group

Yasheng Group (OTCQB: YHGG) (www.yashenggroup.com), founded over 30 years ago, is a US holding company that conducts primarily agricultural operations in the Northwest of China. Today it is one of China’s leading producers and marketers with six major product segments including field crops, vegetables, fruit, specialty crops, hops, hemp, seeds, beef and poultry. Yasheng is a supplier of high-quality agricultural products to world-famous conglomerates such as McDonald’s, KFC, Tsingtao Beer, and Pepsi. The company is led by a highly qualified management team and it has total assets of approximately $1.9 billion including over 250,000 acres of arable land that are utilized for grazing, cultivation, and reclamation, of which 50,000 acres are under cultivation using the latest scientific technologies to produce a wide variety of agricultural products. Yasheng has over 15,000 employees, and a history of strong sales and earnings growth.

Safe Harbor Statement

Except for the historical information contained herein, certain matters discussed in this press release are forward-looking statements which involve risks and uncertainties. These forward-looking statements are based on expectations and assumptions as of the date of this press release and are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties are discussed in the company’s various filings with the Securities and Exchange Commission. The company assumes no obligation to update these forward-looking statements.

Note that the accompanying notes provided in the company’s 10-Q filing from May 6, 2011 (www.sec.gov/Archives/edgar/data/1123312/000119983511000342/yasheng_10q-03312011.htm) are an integral part of these consolidated financial statements.