CALGARY, March 26 /CNW/ - Winalta Inc. (TSX-V - "WTA-A") ("Winalta" or the "Company") For the three months ended January 31, 2010, the Company realized gross profit of $1.7 million on revenue of $9.5 million compared to $3.2 million gross profit on $10.6 million in 2009. The decrease in consolidated gross profit reflects strong competitive product pricing, higher direct selling and setup costs, increased overhead carrying costs related to reduced manufacturing operations resulting from lower production volumes, and low profit margins on construction and aggregate operations during the three month period. The Company reports net losses of $6.4 Million, or $0.18 loss per share for the three months ended January 31, 2010, as compared to a net loss of $2.6 million, or $0.06 loss per share for the three months ended January 31, 2009.
Included in the net loss for the quarter are write downs of $2.7 million to the net realizable value of certain development lands and the remaining construction intangible assets. Overall Homes Division revenue for the three months ended January 31, 2010 is 72% higher as compared to the completed sales and deliveries of homes in the first quarter of 2009. Winalta's Industrial Division achieved gross profit margins of 36% on $5.5 million of revenue for the three months ended January 31, 2010 as compared to 40% on $8.4 million in 2009. Reduced billing rates with marginal cost savings has resulted in the reduced profit margins.
Over the past 12 months Winalta has been reviewing and eliminating excessive overhead costs. As a result, selling, general and administrative (SG&A) expenses have been reduced by $6.5 million on an annualized basis from January 2009 to January 2010. The $1.0 million reduction in general and administrative costs for the three months ended January 31, 2010 as compared to 2009 is a result of cost reduction measures. Winalta is continuing to review and reduce its expenses.
"We are executing on our plans to reduce overhead and debt. We are working with our lenders, who understand our plans, recognize our efforts to date and are willing to work with us through these challenging economic conditions. As we continue operations through fiscal 2010, our revenue and overheads will be closely aligned as to allow Winalta to return to profitability." says Ron Berg, President and CEO, Winalta Inc.
Winalta Inc. is an integrated company with three main operating divisions, Homes, Industrial, and Manufacturing. The Homes Division sells CSA approved homes via retail centers, communities and supply arrangements. The Industrial Division leases portable industrial accommodations and provides construction services that include excavating, aggregate trucking and paving. The Manufacturing Division builds CSA approved homes and portable industrial accommodations from facilities in Acheson, near Spruce Grove, Alberta.
Additional information and Management's Discussion and Analysis are available on SEDAR (www.sedar.com).
Winalta Inc. shares trade on the TSX Venture Exchange under the symbol "WTA.A".
The TSX Venture Exchange has neither approved nor disapproved the contents of this news release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
The words "believe", "expect", "intend", "anticipate", or any variation of such words and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this news release. Winalta undertakes no obligation to publicly update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by securities laws.
SOURCE Winalta Inc.
For further information: For further information: Business Contact, Ron Berg, President & Chief Executive Officer, Winalta Inc., Tel: (780) 960-6900, Fax: (780) 962-9523, firstname.lastname@example.org; Austin Fraser, Vice President Corporate Development and Investor Relations, Tel: (403) 475-4698