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Andatee China Marine Fuel Services Corporation, a leading independent operator engaged in the production, storage, distribution, wholesale purchase and sale of blended marine fuel oil for cargo and fishing vessels in Northern China, has announced a 52.7 percent rise in net income for the second quarter of 2010.

Net income between April and June rose by US$0.9 million to US$2.6 million from US$1.7 million during the corresponding period in 2009.

For the first six months of 2010, net income increased by US$0.9 million, or 26.9 percent, to US$4.1 million from $3.2 million during the first half of last year.

Second Quarter Results

During the second quarter, revenue increased by US$16.2 million, or 58.2 percent, from US$27.8 million in 2009 to US$44.1 million this year.

The increase in revenue was said to be due to an increase in sales volumes and the higher average crude oil price.

Sales volumes during the second quarter rose by 13,000 tonnes, or 22 percent, from 60,000 tonnes last year to 73,000 tonnes in 2010.

Andatee pointed out that the international price of crude has risen from $63 per barrel in the second quarter of 2009 to $79 per barrel in the second quarter of 2010, adding that the increase in sales volumes since last year has been mainly the result of growing activity in the fishing industry, which has attempted to recover losses made during the first half of this year due to lower water temperatures.

Andatee's cost of revenues increased by US$14.3 million, or 58.7 percent, from US$24.4 million in 2009 to US$38.8 million in April to June 2010, due to higher sales.

Gross profit during the second quarter increased by US$1.8 million, or 54.7 percent, to US$5.3 million, compared to US$3.4 million in 2009. As a percentage of revenues, Andatee's gross profit margin was 12 percent for the second quarter of 2010 and 2009, respectively.

Operating income rose by US$1.5 million, or 63.5 percent, from US$2.4 million last year to US$3.9 million in the second quarter of 2010. As a percentage of revenues, operating income increased from 8.5 percent in the second quarter of 2009 to 8.8 percent in 2010.

First Half Results

During the first six months of 2010, revenue increased by US$20.7 million, or 39.1 percent, from US$53.1 million in 2009 to US$73.8 million.

The increase in revenues was said to be the result of increased retail sales due to the expansion of the company's sales network, increased sales volumes and a higher average international crude oil price.

Retail sales as a percentage of total revenues rose to 48.8 percent in the first half of 2010 from 38 percent last year.

During the first six months of this year, Andatee pointed out that international oil prices have averaged around $79 per barrel in comparison to an average oil price of $55 per barrel in the first half of 2009.

Overall sales volumes during this six-month period increased by 4.3 percent, or 5,000 tonnes, from 115,000 tonnes in 2009 to approximately 120,000 tonnes in 2010.

During the second quarter of 2010, as water temperatures returned to normal levels the fishing industry increased its working hours to make up for the losses incurred during the first quarter, which, in turn, resulted in higher demand for Andatee's fuel products.

A breakdown of total sales has been provided below for each fuel grade during the first six months of 2010.

#2 marine fuel - 9.5%
#3 marine fuel - 10.0%
#4 marine fuel - 65.1%
180-cst - 10.3%
120-cst - 5.1%

Figures for the first six months of 2009 have been provided below.

#2 marine fuel - 8.7%
#3 marine fuel - 10.5%
#4 marine fuel - 70.9%
180-cst - 8.4%
120-cst - 1.5%

Andatee's cost of revenues between January and June increased by US$18.2 million, or 39.2 pecernt, from US$46.7 million in 2009 to US$64.9 million in 2010, due to higher sales.

Gross profit during the six-month period increased by US$2.4 million, or 38.1 percent, to US$8.8 million from US$6.4 million in 2009.

As a result of the company's expansion and acquisition of retail distribution facilities in Xinfa, Nanlian and Mashan, sales to retail customers, which generally carry a higher gross profit margin, increased from 38 percent of total sales in the first half of 2009 to 48.8 percent of sales in 2010.

Operating income during the first six months of the year increased by US$1.7 million, or 39.8 percent, from US$4.3 million in 2009 to US$6.0 million in 2010 . As a percentage of revenues, operating income increased from 8.1 percent in 2009 to 8.2 percent in 2010.