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Friday, March 16, 2007

DAC Technologies (DAAT) 2006 Results

DAAT (sec) I last covered DAAT back in July 2006. These guys make gun cleaning kits for Wal*Mart stores. I noticed something this time worth noting (otherwise, I really don't follow the company closely at all).

Here's the press release for 2006.
However, due to a number of factors, we have experienced a decrease in our gross profit margins of about 5% for the year as compared to last year. During 2006, we experienced some significant price increases on some of our items, particularly some of the gun cleaning kits. These increases were due to increases in commodity prices for brass, metal, plastic, as well as wood. There has also been a devaluation of the US dollar versus the Chinese RMB of 4% in the past year. Since our Chinese manufacturers operate their business in RMB, they are now receiving 4% less when they convert the US dollars we pay into RMB. This has caused them to have to increase their prices to recover this loss. It has been difficult to raise our own prices in response to these increases.
Just an interesting sample point. When inflation happens, you find out who has pricing power and who doesn't. Having Wal*Mart as a main customer doesn't help.

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