SkyPeople Fruit Juice, Inc. Reports FY09 Q2 Results

SkyPeople Fruit Juice, Inc., a leading processor and manufacturer of concentrated apple, kiwifruit, pear and other fruit juices and fruit products in the People's Republic of China, today reported financial results for the second quarter ended June 30, 2009

Second Quarter 2009 Highlights

-- Reported revenues of $6.2 million and gross profit margins of 31.0%.
-- Income from operations decreased to $990,000, compared with $2.2 million in the second quarter of 2008.
-- Reported net income of $1.7 million or $0.06 per shares.
-- Established California-based subsidiary to enhance US sales.

Management's Commentary

"Our sales in the second quarter were largely impacted by a drop in consumer spending in the international market based on the current global economic climate," Mr. Yongke Xue, CEO of SkyPeople. "Despite the decline in total revenue, we saw a 72% year-over-year increase in sales for our fruit juice beverages to $3.0 million, as well as achieved a $690,000 sequential-quarter increase for sales of our fruit vinegar beverages, which we introduced to the Chinese market in the 2009 first quarter. We plan to continue to grow our business and focus on introducing new and higher margin products to capture additional fruit juice market share.

"We are well-positioned to further penetrate the high-growth pure juice beverage market in our primary market both domestically and internationally. We believe there remains significant opportunity to grow our business in China as it has historically demonstrated steady annual fruit juice beverages market growth rates. In particular, we expect the pure juice market in China to continue to evolve based on escalating personal income and an increase in health awareness of Chinese consumers. Internationally, in July we accelerated our sales efforts in the US by establishing Harmony MN, a California-based sales operations to reach key markets in the US and support our expected growth.

"We are continuing to evaluate acquisition candidates and invest in upgrading our facilities to capture additional fruit juice market share. We are working to improve our operational efficiency and expand our productivity, with a focus is on increasing production capacity for our apple- and pear-related products as well as our kiwifruit and mulberry product lines," Mr. Xue concluded.

Second Quarter 2009 Results

Revenue for the second quarter of 2009 was $6.2 million, compared to $7.2 million in the second quarter of 2008. The decrease was primarily due to reduced sales of concentrated juice, partially offset by an increase in sales of fruit beverages and fruit vinegar beverages in the Company's Chinese market.

The Company reported gross profit of $1.9 million for the second quarter of 2009, compared with $2.9 million in the second quarter of 2008. Gross margin as a percent of revenue for the second quarter of 2009 was 31.0%, compared with 40.3% in the comparable 2008 period. The decrease in gross margin as a percentage of revenue in the second quarter of 2009 was due primarily to a decrease in the selling price of concentrated juice products in international market, partially offset by a change in sales mix to include sales of higher-margin fruit vinegar beverages.

Operating expenses were $933,000 in the 2009 second quarter, compared with $711,000 in the 2008 second quarter. The increase in operating expenses was due primarily to increased investment in new product research and development, partially offset by a decrease in selling expenses.

Income from operations decreased to $990,000 from $2.2 million in second quarter of 2008.

Provision from income taxes was $722,000 for the second quarter of 2009, compared with $181,000 for the second quarter of 2008. The increase in tax provision was due to an increase in the effective tax rate of Shaanxi Tianren (SkyPeople Fruit Juice, Inc. is the holding company for Shaanxi Tianren Organic Food Co., Ltd.).

Shaanxi Tianren was awarded the status of a nationally recognized High and New Technology Enterprise in December 2006, which entitled Shaanxi Tianren to tax-free treatment for two years starting from 2007. Starting in 2009, Shaanxi Tianren is subject to the regular tax rate of 25% according to the new tax law in China, which was effective on January 1, 2008.

Net income was $1.7 million, or $0.6 per diluted share, for the quarters ended June 30, 2009 and 2008.

Balance Sheet Highlights

As of June 30, 2009, cash and cash equivalents totaled $16.5 million, working capital was $15.0 million and stockholders' equity was $44.1 million.

About SkyPeople Fruit Juice, Inc.

SkyPeople Fruit Juice, Inc. is a holding company for Shaanxi Tianren. Shaanxi Tianren is a company organized according to the laws of the People's Republic of China. SkyPeople's main products are concentrated apple, kiwifruit, pear and other fruit juices for domestic and international consumers. Its brand, HEDETANG, is positioned as a high quality, healthy and nutritious juice concentrate and clear juice product used both as an ingredient component in other products and an end-use juice concentrate product. Shaanxi Tianren owns the largest kiwifruit plantation in China and is a leading worldwide producer of concentrated kiwifruit juice. For more information, please visit .

Forward-Looking Statements

This press release contains certain "forward-looking statements" that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to, the Company's ability to obtain the necessary financing to continue and expand operations, to market its products in new markets and to offer products at competitive pricing, to attract and retain management, and to integrate and maintain technical information and management information systems, political and economic factors in the People's Republic of China, compliance requirement of laws and regulations of the PRC, the effects of currency policies and fluctuations, general economic conditions and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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