(RTTNews) - Private educational services provider New Oriental Education and Technology Group Inc. (EDU: News ) reported Tuesday higher profit for the first quarter, helped by strong revenue growth owing to increased student enrollments in language training and test preparation courses.

The China-based company's quarterly net income rose to US$57.1 million or US$1.47 per ADS from US$44.9 million or US$1.17 per ADS last year. Each ADS represents four common shares.

On a Non-GAAP basis, net income was up 24.6% to US$60.8 million from US$48.8 million. Non-GAAP earnings per ADS was US$1.57 compared to US$1.27 per ADS in the prior year. On average, six analysts polled by Thomson Reuters expected earnings of US$1.57 per ADS. Analysts' estimates typically exclude special items.

Net revenues grew 26.3% year-over-year to US$149.4 million, up from US$118.3 million in the same period last year, but down from Street view of US$154.57 million.

"We estimate that the H1N1 flu pandemic negatively impacted our top line growth by 2-4% with a more significant negative percentage impact on our bottom line for the quarter -- Further, we experienced record cancellations and deferments in enrollments from registered students, and we closed or cancelled classes and summer camps across China whenever an enrolled student was diagnosed with the H1N1 flu, as required by applicable local health regulations," said Michael Yu, New Oriental's chairman and chief executive officer.

The group recorded blended average selling price growth of around 9.5% for the quarter, mostly driven by students electing higher priced smaller size class offerings.

Total student enrollments in language training and test preparation courses was up 18.7% year-over-year to about 647,500 from 545,400 in the first-quarter of fiscal 2008.
Cost of revenues increased by 23.8% to US$47.7 million from US$38.48 million, primarily due to the increased number of courses and the greater number of schools and learning centers in operation.

Operating costs and expenses for the quarter was up 27.4% to US$88.4 million from US$69.3 million, with 57.3% and 20%, increase in selling and marketing expenses and general and administrative expenses, respectively.

Quarterly operating margin dropped to 40.8% from 41.3%, primarily due to increased marketing expenses related to POP Kids English, U-Can and the launch of New Oriental's customized learning program.

"We are hopeful that the adverse effects on our business from the fear of H1N1 will gradually subside as the H1N1 flu vaccine has been made available in China this month and will become widely available across the country with over 60 million doses planned in the months ahead," Yu added.

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