SINGAPORE (Nov 14): USP Group reported a loss of $0.5 million for 2Q18, sinking into the red from its earnings of $0.2 million a year ago on higher expenses.
Revenue for the quarter grew 32% to $11.9 million compared to $9 million previously on higher contributions from Supratechnic Group and its subsidiaries, which USP says reflects greater product acceptance by consumers in Indonesia and East Malaysia, its new markets.
This comes as a result of its customers gaining greater accessibility to the group’s products and parts, as more dealers and sub-dealers joined its distribution network upon the opening of more of its service centres and branch operations, says USP in its regulatory filing on Tuesday.
Cost of sales grew 60% to $7.8 million over the quarter compared to $4.9 million in 2Q17.
The key expense of other expenses, says USP, arose mainly from fair value adjustments on the company’s marketable securities – leading to a fair value loss of $0.7 million registered over the quarter compared to $0.2 million a year ago.
While selling and distribution expenses remained relatively stable compared to the quarter before, general and administrative expenses grew 8% to $3.4 million on the incremental depreciation on investment properties which were recognised in 1Q, and subsequently reversed in 3Q.
Commenting on its oil-blending business, USP says the global oil market has shown encouraging signs of recovery in recent months, while its oil business has also shown signs of revenue improvement.
Nonetheless, the group is holding back any expansion plans due to uncertainty in oil prices, as a substantial amount of capital expenditure is expected to be committed for such expansion plans.
Its marine business, which is represented by Supratechnic Group, is however reviewing its expansion plans and is on target to open more branches in Indonesia and Malaysia.
The group also emphasises that its second quarter revenue growth reflects its successful market expansion and penetration of its marine products in the new markets of Indonesia and East Malaysia.
Shares in USP Group closed 2 cents higher at 12 cents on Tuesday.
