Gross profit increased by 18.2% to $40.9 million in fiscal year 2011 from $34.6 in the prior fiscal year. Gross margin decreased to 27.3% as compared to 30.0% in fiscal year 2010. The decrease in gross margin was attributable to an increase of the average purchasing price of cotton. The Company expects overall gross margin to rise over the next fiscal year as it continues to add to its business portfolio by developing and marketing advanced medical products as well as PurCotton® products, which carry higher gross margins.
Government subsidies increased to $1.6 million in fiscal year 2011 from $0.2 million in the prior fiscal year. The Shenzhen city government grants financial incentives to distinguished local enterprises each year, and the Company anticipates being able to maintain such incentive going forward.
Realized loss from commodity derivatives was $1.9 million on cotton futures trading in fiscal year 2011, compared to $nil in fiscal year 2010. The Company set up a special team with experience in spot and futures markets transactions to better monitor and control its exposure to cotton futures trading activities as well as to better coordinate these activities with the company's sales plans.
Foreign exchange losses, net was $1.1 million in fiscal year 2011, compared to $0.5 million in fiscal year 2010, mainly due to the appreciation of the Renminbi. In order to minimize exchange loss, the Company is now inserting clauses in its contracts with non-China based customers in order to better manage the fluctuation of the RMB.
Selling, general and administrative expenses increased by 30.2% to
|SOURCE Winner Medical Group Inc.|
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