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Hupsteel swings into the red for Q4, full-year

Hupsteel Limited reported a net loss of S$9.3 million for the fourth quarter ended June 30 owing to an inventory write-down, a goodwill write-off and provision for doubtful debts. The group had recorded a net profit of S$1.13 million in the same quarter last year.

This brought the group to a net loss position of S$7.95 million for the full fiscal year, down from a net profit of S$3.55 million in fiscal 2014.

Hupsteel explained that fierce competition and sliding market demand led the group to review the carrying value of its inventory holdings, resulting in a S$3.3 million of provision for inventory write-down during the quarter.

It also decided to write off the goodwill of S$4.6 million associated with the acquisition of the structural steel business as the evaluated net present value of its future cashflow generated by the unit could not support the carrying value of its net assets after taking into consideration the dim outlook for the middle term.

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The group had made a provision for doubtful debts of S$1.9 million and a large proportion of the amount was provided against overseas customers.

As demand for steel products continued to soften throughout the fiscal year, the group reported a 36.3 per cent drop in revenue to S$17.4 million.

The board is proposing a final dividend of 0.1 cent per share, down from 1 cent per share in the preceding financial period.