China Clean Energy Announces Second Quarter 2009 Results

- Revenues up 51.8% from first quarter 2009
- Gross profit up 157.6% from first quarter 2009
- Gross margin reached 21.5%

FUQING CITY, China, Aug. 14 -- China Clean Energy Inc. (OTC Bulletin Board: CCGY) ('China Clean Energy', the 'Company'), a producer of biodiesel fuel and environmentally-friendly specialty chemical products made from renewable resources in The People's Republic of China ('PRC'), today reported financial results for the second quarter ended June 30, 2009.

Second Quarter 2009 Highlights
 -- Revenue totaled $4.3 million, up 51.8% from the first quarter 2009
 -- Gross profit totaled $917,785, up 157.6% from the first quarter 2009
 -- Adjusted EBITDA was $862,525
 -- Operating income was $494,470, compared to a loss of $159,038 in the first quarter 2009
 -- Net loss was $76,832 on a GAAP basis

'We are very pleased with our results for the quarter, reflecting a healthy recovery in volume and average selling prices for both our specialty chemicals and biodiesel products from depressed first quarter levels, which allowed us to expand our gross margins and return to profitability at the operating level,' said Mr. Tai-ming Ou, China Clean Energy's Chairman and CEO. 'We are also pleased to reaffirm that the Jiangyin plant is on target to come on stream in the fourth quarter, which will allow us to substantially expand our specialty chemical and biodiesel capacity. As we move into the third quarter we expect to continue to benefit from the recent recovery in the global economy and hope to make further progress on both our top and bottom line results as we increase capacity utilization and benefit from firm pricing.'

Second Quarter 2009 Results

China Clean Energy's net revenue in the second quarter was $4.3 million, down 22.3% from the second quarter of 2008, and up 51.8% from the first quarter 2009. The year-over-year decline in revenue was driven by lower selling prices and lower domestic sales, primarily driven by the declining demand in the domestic specialty-chemicals market as the economic slowdown continued in 2009 The sequential increase in revenues was driven by higher volume and average selling prices for both biodiesel and specialty-chemicals. Average selling price for biodiesel was RMB 3,870 in the second quarter 2009 compared to RMB 3608 in the first quarter 2009. Biodiesel sales volume was 1,493 tons in the second quarter of 2009, compared to 1,036 tons in the first quarter of 2009. The Company did not produce biodiesel in the second quarter of 2008. The average selling price for specialty chemicals was RMB 8,766 in the second quarter 2009 compared to RMB 8,650 in the first quarter 2009 and sales volumes were 2,655 tons and 1,782 tons respectively.

Gross profit in the second quarter of 2009 was $917,785 down 32.4% from $1.4 million in the comparable period in 2008, and up 157.6% from $356,332 in the first quarter 2009. The year-over-year decline in gross profit was driven by lower volume, lower selling prices and higher manufacturing overhead costs. The sequential increase in gross profit resulted from higher volume and stronger prices. Gross margin in the second quarter 2009 was 21.5% compared to 24.8% in the comparable period 2008 and 12.7% in the first quarter 2009.

Operating expense in the second quarter of 2009 was $423,315 down 31.0% from $613,651 in the comparable period in 2008, and down 17.9% from $515,370 in the first quarter 2009, driven by lower stock-based compensation expenses. In the second quarter 2009 the Company recorded an operating profit of $494,470 compared to an operating profit of $744,802 in the comparable period in 2008 and an operating loss of $159,038 in the first quarter 2009.

Adjusted EBITDA for the second quarter 2009 was $862,525 compared to $1.2 million in the comparable period of 2008, and $194,118 in the first quarter 2009. A table reconciling Adjusted EBITDA, which is a non-GAAP measure, to the nearest GAAP measure is available elsewhere on this release.

Net loss for the second quarter 2009 was $76,832 or $0.002 per share compared to a profit of $557,690 or $0.02 per share in the second quarter 2008, and a loss of $143,484 or $0.005 per share in the first quarter 2009. Net loss for the second quarter includes a $145,429 non-cash charge for stock based compensation and a $413,662 non-cash charge for warrant liability revaluation. Additional detail about these charges can be found in the 10-Q form filed with the SEC on August 13, 2009.

Six Months Results

For the first six months of 2009, total revenue was $7.1 million, down 29.0% from the first six months of 2008. Gross profit for the first six months of 2009 was $1.3 million, down 46.9% from gross profit of $2.4 million in the comparable period a year ago. Gross margin was 18.0% and 24.1% for the first six months of 2009 and 2008, respectively. Income from operations was $335,432, down 68.3% from $1.1 million in the first six months of 2008. Adjusted EBITDA was $1.1 million for the first six months of 2009, down 45.3% from $1.9 million for the comparable period of 2008. Net loss for the first six months of 2009 was $202,316 compared to net income of $749,228 in the first six months of 2008. Net loss for the first six months of 2009 includes a $238,523 non-cash charge for stock based compensation and a $507,238 non-cash charge for warrant liability revaluation. Fully-diluted loss per share was $0.01 for the first six months of 2009, compared to earnings per share of $0.02 in the comparable period in 2008.

Financial Condition

As of June 30, 2009, China Clean Energy had $4.5 million in total cash, approximately $3.5 million in working capital, and $3.6 million of debt. Stockholders' equity at June 30, 2009 stood at $31.6 million, or approximately $1.00 per share.

Conference Call

China Clean Energy will hold its second quarter 2009 conference call for all interested persons at 08:00 a.m. Eastern Time on August 14, 2009 to discuss its results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1-866- 800-8648. International callers should dial +1-617-614-2702. When prompted by the operator, mention Conference Passcode 73793298. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on August 14, 2009 at 10:00 a.m. Eastern Time. To access the replay, dial 888-286-8010 or for international callers, dial +1-617-801-6888 and enter the passcode 32906676.

About China Clean Energy:

China Clean Energy, through its wholly-owned subsidiaries, Fujian Zhongde Technology Co., Ltd. and Fujian Zhongde Energy Co., Ltd, is engaged in the development, manufacturing, and distribution of biodiesel and specialty chemical products made from renewable resources. For additional information please visit: http://www.chinacleanenergyinc.com

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the Company's ability to raise additional capital to finance the Company's activities; the effectiveness, profitability, and the marketability of its products; legal and regulatory risks associated with the share exchange; the future trading of the common stock of the Company; the ability of the Company to expand its production capacity; the period of time for which its current liquidity will enable the Company to fund its operations; the Company's ability to protect its proprietary information; general economic and business conditions; the volatility of the Company's operating results and financial condition; the Company's ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.

To view Second Quarter Financial Table Results,please click Here

For more information, please contact:

China Clean Energy Inc.
Shannon Yan, CFO
Email: shannon.yan@chinacleanenergyinc.com

CCG Investor Relations Inc.
Crocker Coulson, President
Phone: +1-646-213-1915 (New York)

Ed Job, CFA
Phone: +1-646-213-1914
Email: ed.job@ccgir.com