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news.Caraco has recorded a steep decline in net sales and profits during fiscal year 2009. The net sales of the company reached $337.2 million, as compared to $350.4 million in fiscal 2008, a decrease of 4%. The decrease is due to lower sales of manufactured products, and price erosion in both manufactured and distributed product sales. Voluntary product recall during late Fiscal 2009 and the beginning of Fiscal 2010 also affected the sales figure.
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The company declared a gross profit of $67.8 million for fiscal 2009, compared to a gross profit of $84.7 million during fiscal 2008, a decrease of 20%. The decrease in gross profit is attributed to the weight of distributed product sales versus manufactured product sales, price erosion on both distributed and manufactured product sales, and lower sales of manufactured products due to voluntary product recalls.
Daniel H. Movens, CEO, Caraco commented on the decline of gross profit: Although gross profit margins may come down over time due to price erosion, we are confident that our sales growth, expanding product portfolio and successful execution of our business plan will offset any long-term impact.
We remain confident that our basic fundamental performance over the course of Fiscal 2010 will provide sufficient disclosure to our shareholders. The recent voluntary recalls previously disclosed have had a negative impact on the Company’s performance and may continue to have a negative impact in the near term. Price erosion on both manufactured and distributed products also contributed to the decline of our top line growth. We remain confident that our corrective actions in compliance and quality will ultimately let us gain back our momentum of growth that we have enjoyed over the last several years. We are fortunate to have a successful marketing platform and Sun Pharmaceutical Industries Inc.’s product line to complement our manufacturing products business, he added.