China Bio Energy Holding Group Co., Ltd. (China Bio Energy), a manufacturer and distributor of biodiesel, has reported net sales of $58.7 million for the first quarter of 2009, up 65%, compared with the net sales of $35.6 million in the year-ago quarter. It also reported a net income of $7.2 million, or $0.21 per diluted share, for the first quarter of 2009, compared with the net income of $4.7 million, or $0.15 per diluted share, in the year-ago quarter.

China Bio Energy reported $35.4 million in cash and equivalents on March 31, 2009 and generated $11.7 million in cash flow from operations for first quarter.

Reaffirms 2009 Guidance:

Revenues and Net Income of at least $240.7 million and $33.7 million, respectively.

First Quarter 2009 Financial Results:

Net Sales:

The increase in net sales was mainly due to strong growth among its three business segments, finished oil distribution, biodiesel production and sales generated by five fully operational gas stations.

Cost of Sales:

Cost of sales for the first quarter of 2009 was $51.0 million compared to $30.5 million in the year-ago quarter, an increase of 66.9%. The increase was due to the rise in production and sales activities. Cost of sales as a percentage of sales was around 86.9% for the first quarter of 2009 and 85.9% for same period in 2008. The increase was due to higher inventory cost of finished oil carried over from the forth quarter of 2008, a modest increase in the cost of biodiesel feedstock, and rental expense for the four additional gas stations.

Gross Profit and Gross Margin:

Gross profit was $7.7 million for the first quarter of 2009 compared to $5.0 million in the year-ago quarter, an increase of 53.1% and represented gross margins of around 13% and 14%, respectively. The slight decrease in gross margin is primarily due to factors listed above which impacted costs of sales. During the first quarter of 2009, the gross profit margin for biodiesel production and sales was around 24.0% while gross profit margin for distribution of finished oil products, such as gasoline and diesel oil, was around 10.5% and retail gas stations generated a gross margin of 11.6%.

Operating Expenses:

Selling, general and administrative expenses for the first quarter of 2009 were around $0.56 million compared to $0.32 million in the year-ago quarter, an increase of 73.8%. Total operating expenses as a percentage of sales for the first quarter of 2009 and 2008 were 0.95% and 0.90%, respectively. The increase was mainly attributed to legal fees, stock option expenses for the independent directors and employees, and other expenses in connection with the company becoming a publicly traded company in the US.

Net Income:

In the first quarter of fiscal year 2009, the average weighted shares outstanding were 34.6 million shares versus 31.5 million shares in the year-ago quarter.

Financial Outlook for 2009:

Management reaffirms 2009 guidance and expects to report calendar 2009 revenues of at least $240.7 million and net income of at least $33.7 million, representing an increase of 11% and 18% compared to 2008 revenue and adjusted net income, respectively. Guidance includes the addition of 50,000 tons of incremental biodiesel production capacity expected to come online during third quarter of 2009 and include the planned acquisition or lease of additional retail gas stations.

Business Outlook for 2009:

The company is planning to expand its present biodiesel production capacity of 100,000 tons to 150,000 tons, either through strategic acquisitions or through a new build-out in 2009. The company expects $15 million in capital expenditures to reach this goal.

‘We are very pleased with our results for the first quarter which was the culmination of strong growth across all three business segments,’ stated Gao Xincheng, chief executive officer of China Bio Energy. ‘Despite a current environment of lower oil prices in China and worldwide, we believe that several fundamental factors are firmly in place which will drive future revenue and earnings growth for our company. These include China’s increasing demand for energy to accommodate future organic domestic growth, which will benefit directly from the stimulus plan, an increase in utilization of both consumer and commercial vehicles, a shortage of domestic oil resources and dependence on foreign sources, in addition to government initiatives to increase the utilization rate for alternative fuel while decreasing pollution emissions.’