SINGAPORE (Feb 7): CosmoSteel Holdings, the Mainboard-listed supplier and distributor of piping system components, has reported 1Q17 losses of $0.95 million, 49.3% down from its losses of $1.9 million in the same quarter a year ago.
Revenue for the quarter declined 13.6% to $14.8 million from $17.1 million in 1Q16, largely due to a fall in revenue from customers in its marine sector by 74.7% to $1.4 million from $5.6 million previously.
This was partially offset by a spike in revenue from the trading sector to $3.2 million in 1Q17, from $0.8 million the year before.
Despite the overall decrease in revenue, gross profit margin increased by 4.1 percentage point to 23.4% in the quarter due to lower cost of sales.
Financial expense for 1Q17 fell 49% to $0.1 million, mainly due to lower interest paid on reduced borrowings.
Together with the decrease in revenue, distribution costs fell by 9.7% from $1.7 million in 1Q16 to $1.5 million in the current quarter, while administrative expenses remained unchanged at $1.7 million due to fixed overheads.
Depreciation expense, however, grew 12.4% to $1.5 million mainly from higher depreciation on its properties.
CosmoSteel says it expects the weak demand from the energy industry to continue affecting its ability in generating sufficient revenue to cover its fixed operating costs, which in turn may result in continued losses in 1H17.
The company adds that it intends to continue managing its costs more effectively while actively identifying new potential markets as well as suitable opportunities for growth, in attempt to mitigate its adverse financial performance in FY17.
Shares of CosmoSteel closed 0.8% lower at 12 cents on Tuesday.
