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Winner Medical Reports Third Quarter Fiscal 2012 Results
Date:8/9/2012

ales as a percentage of revenue was 74.6% and 72.8% for the three months ended June 30, 2012 and 2011, respectively. The increase in cost of sales was mainly attributable to: (1) an approximate 15% salary cost increase (which included welfare and social insurance for employees); and (2) an approximately US$818,000 depreciation and impairment cost related to a factory workshop owned by Hubei Winner and painting equipment owned by Winner Medical (Huanggang) Co., Ltd.

Gross profit increased by 8.2% to $12.2 million in the third quarter of fiscal 2012 from $11.3 million in the same quarter of the previous fiscal year. Gross margin decreased to 25.4% from 27.2% in the third quarter of fiscal 2011. The decrease in gross margin was mainly due to: (1) lower selling prices to customers in Europe and the United States. Challenging global economic conditions, especially in Europe and North America, have forced governments in those areas to tighten public expenditures, leading to a more stringent budget for medical products. In order to maintain long-term cooperation with those customers, the Company offered certain products with lower selling prices than before to maintain and attract orders during the current economic climate. The Company expects that ongoing adjustments of selling prices might continue, subject to global economic conditions and customer demands; (2) approximately US$818,000 in depreciation and impairment costs related to a factory workshop owned by Hubei Winner Textile Co., Ltd. and painting equipment owned by Winner Medical (Huanggang) Co., Ltd.; and (3) an approximate 15% salary increase (which included welfare and social insurance for employees).

Government subsidies increased to approximately $170,000 in the third quarter of fiscal 2012 from approximately $90,000 in the same quarter of the previous fiscal year. The increase was mainly driven by an increase in financial incentives from the Shenzhen government as compared to the same period o
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SOURCE Winner Medical Group Inc.
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