China Linen Textile Industry Ltd, one of China's leading linen fabric and linen yarn producers and exporters, announced financial results for the first quarter ended March 31, 2011.

• Q1 2011 revenues increased 79% to $15.8 million.
• Q1 2011 gross profit increased 109% to $5.7 million, gross margin up 507 basis points to 36.0%
• Q1 2011 net income increased 50% to $3.2 million; diluted EPS of $0.46 vs. $0.36 a year ago.

"The first quarter of this year was marked by continued growth in revenues and net income, which benefitted from both volume increases and price improvements. We successfully expanded the sales and distribution channels for our linen fabric and yarn during the past year and utilized new capacity brought on-line through the Lanxi Tianxianfang Linen Co. acquisition. We also began to realize cost saving benefits from the integration of this business," said Mr. Gao Ren, Chairman and CEO of China Linen.

"Through the addition of a bleaching factory and our recently upgraded linen yarn dyeing facility, we are becoming a vertically integrated linen producer, which enables to us to capture more of the value chain while meeting increasing demand for our products both in China and abroad. International sales comprised 58% of revenues and were driven by growth in India and Turkey, including new markets such as Spain and Thailand, while higher domestic demand for linen products also drove revenue growth."

Three Months Ended March 31, 2011 Financial Results

Revenue for the three months ended March 31, 2011 totaled $15.8 million, up approximately 79% from $8.8 million for the three months ended March 31, 2010. The increase in revenue was primarily attributable to increased sales volume of both linen yarn and linen fabric, increased sales from the acquisition, increased sales from new products and new customers.

Gross profit for the first quarter of 2011 was $5.7 million, up 109% from $2.7 million from the first quarter of 2010 and was driven by sales growth. Gross margin for the three months ended March 31, 2011 was 36.0%, an increase of 507 basis points from 30.9% for the three months ended March 31, 2010, mainly due to sales price increases and our ability to efficiently control production costs.