Magnotta Winery Corporation
TSX : MGN

Magnotta Winery Corporation

April 25, 2008 14:29 ET

Magnotta Winery Corporation Announces January 31, 2008 Annual Results

VAUGHAN, ONTARIO--(Marketwire - April 25, 2008) - Magnotta Winery Corporation (TSX:MGN), is pleased to announce the release of its financial results for the year ended January 31, 2008.

Net sales for the year increased 1.9% to $23,391,225 from $22,955,623, however for the fourth quarter net sales decreased 3.3% to $4,599,147 from $4,754,178. Net earnings decreased to $2,657,259 from $2,835,125 for the year and for the fourth quarter decreased to $140,719 from $352,975 for the corresponding period of the prior year. The overall growth in net sales for the year resulted from greater volumes due to an expanded customer base from relatively recent new location openings and a winery relocation. The Company has been expanding its branding campaign through its marketing, advertising and point of sale materials, through a radio media campaign, as well as with its print, television and in-store newsletters, product sampling exhibits and trade shows, and contests. This has created more brand awareness, and increased sales. However, due to the snow storms and inclement weather during the holiday and January period, the overall growth was tempered somewhat.

Overall gross profit margin for the year increased marginally to 47.9% in fiscal 2008 from 47.6% in fiscal 2007. For the fourth quarter, the gross profit margin increased to 41.1% from 38.3% in the previous year. The change in the gross profit margin is due to the product mix favouring higher margin product sales and the strength of the Canadian dollar during the year which has caused U.S. denominated purchases to be less expensive. The Company is gradually increasing its portfolio of higher end product offerings which contribute to higher margins. However, this was mitigated somewhat due to some cost pressures from raw and packaging materials, energy costs, as well as higher Ontario grape prices. These cost pressures are expected to continue in the near term.

Selling, administration and other expenses were $4,916,897 for the year ended January 31, 2008 compared to $4,529,282 for the year ended January 31, 2007. For the fourth quarter, selling, administration and other expenses were $1,427,296 compared to $1,249,513 in the same period of the prior year. The Company has been expanding its marketing so to increase brand awareness as well as increased its employee count from 102 employees at January 31, 2007 to 107 employees at January 31, 2008. This resulted in an increase in selling, administration and other expenses.

Depreciation decreased in fiscal 2008 to $1,296,786 from $1,335,131 in fiscal 2007, and for the fourth quarter it was $344,675 compared to $365,643 in the same period the prior year. The change resulted from generally less capital asset investments, made over prior years, in the Company's production equipment, vineyards and retail locations.

Interest expense for the year ended January 31, 2008 decreased to $862,380 from $912,133 in fiscal 2007. During the fourth quarter, interest expense was $157,368 compared to $177,003 for the same quarter last year. The decrease is due to lower long-term debt in fiscal 2008 compared to fiscal 2007.

Earnings before interest, income taxes and depreciation decreased to $6,284,087 from $6,400,498 in fiscal 2007. For the fourth quarter, earnings before interest, income taxes and depreciation decreased to $460,424 from $571,730 in fiscal 2007.

Additional details and information are included in the Management Discussion and Analysis and consolidated financial statements for January 31, 2008.

The common shares of Magnotta trade on the TSX under the symbol "MGN".

Readers are cautioned that some of the statements contained in this release may be forward-looking statements, such as expectations, estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition to exist or occur. Generally, these forward-looking statements can be identified by the use of terminology such as "outlook", "anticipate", "believe", "estimate", "expect", "intend", "should", and similar expressions. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ from those currently anticipated in such statements by reason of factors such as, but not limited to, changes in general economic and market conditions. Magnotta disclaims any intention or obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or results, or otherwise.

To view the Management's Discussion and Analysis, please click the following link: http://media3.marketwire.com/docs/magmda.pdf

To view the Financial Statements, please click the following link: http://media3.marketwire.com/docs/magafs.pdf

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