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Union Steel swings into the red in Q4 and FY15
Union Steel Holdings Limited swung to a net loss of S$8.4 million for the fourth quarter ended June 30, 2015 from a net profit of S$2.1 million a year ago.
This was due to a sharp fall in revenue as well as a S$6.7 million impairment of inventory.
Revenue fell by 37.2 per cent to S$27.8 million, as revenue from the recycling and trading business segments slipped and sales activities from the group's Malaysian entity shrunk.
Gross profit margins - falling to 6.1 per cent in the quarter from 12.5 per cent in a year-ago period - were squeezed by lower selling prices and higher cost of sales in the recycling and trading business segments.
The group recorded other operating expenses of S$9.8 million, compared to S$2.4 million in a year-ago period, mainly due to a S$6.7 million impairment of inventory arising from the depressed metal price environment, as well as a S$0.9 million write-down of the value of an investment property.
For the full fiscal year, the group inked a net loss of S$7.5 million from a net profit of S$4.5 million in the preceding year; revenue fell 8.2 per cent S$133.7 million, mainly dragged down by the fall in revenue in the final fiscal quarter.
"Across the board, the steel industry has been affected by adverse market conditions," said group executive chairman and CEO Ang Yu Seng. "We shall attempt to weather these extremely challenging times as best as we can, and smoothly integrate our recent Gee Sheng acquisition with our current operations so that the synergies within the group can be harnessed effectively."
The Group recently acquire an 85.2 per cent stake in Gee Sheng Machinery & Engineering Pte Ltd ("Gee Sheng"), which carries out civil construction & engineering work and the manufacture of motor vehicle bodies (coachwork), trailers and semi-trailers.