China Precision Steel Announces Fiscal 2013 Year End Results
Full Year 2013 Highlights
Revenue was US$36.5 million
Total volume sold was 56,232 tons
Gross loss was US$11.8 million
Net loss was US$69.0 million
Net loss per share was US$17.76
"We started the year off with a challenging environment of overcapacity of steel production combined with sluggish demand which resulted in a significant drop in our sales volume for fiscal year 2013. In response to the industry's problems, the State Council and other oversight organizations have decided to implement steps to address the overcapacity including putting aside funds for promoting restructuring and mergers of steel companies," commented Mr. Hai Sheng Chen, CEO of China Precision Steel. "While government organizations work to improve the conditions in the industry, we are pleased to have experienced a progressive increase in our sales volume from the low of the first quarter in fiscal year 2013, primarily due to strengthening of our relationships with customers in less competitive markets such as the auto and international markets."
Revenue for fiscal year 2013 was US$36.5 million, down 74.5% from revenue of US$143.0 million in fiscal year 2012. High carbon and low carbon products accounted for 38.2% and 59.8% of sales, respectively, compared to 18.3% and 79.3%, respectively, in the prior year. International sales represented 10% of total sales, up from 5% in fiscal year 2012.
With China's economy losing steam over the past year combined with overcapacity and softening demand for steel, steel prices have been under pressure. Subsequently, gross loss for the fiscal year 2013 wasUS$11.8 million compared to a gross loss of US$5.8 million in fiscal year 2012. Gross margin was (32.2%), compared to gross margin of (4.1%) a year ago. Operating loss was US$70.2 million, compared to operating loss of US$14.0 million in fiscal year 2012. Net loss was US$69.0 million, compared to a net loss of US$16.9 million a year ago. Fully diluted loss per share was US$17.76, compared to fully diluted loss per share ofUS$4.37 for fiscal year 2012.
As of 30 June 2013, China Precision Steel had US$75,243 in cash and cash equivalents, total liabilities ofUS$67.0 million. Stockholders' equity was US$52.9 million, compared to US$118.9 million as of June 30, 2012.
"China's economy appears to be improving as economic activity is increasing and confidence is returning for the country's growth prospects. As a result, many local governments that hadn't been able to expand investments amid the economic slowdown are now restarting their plans to spend on infrastructure which is expected to support the rebound in demand for steel," Mr. Chen continued. "While the economy and the steel industry in particular are in the early stages of turning around, we are taking steps to improve our working capital and operating cash flow by implementing policies to reduce our accounts receivable. We are also working to continue to strengthen our collection efforts as well as tighten controls on all further credit sales to minimize future risks during this difficult environment. We remain committed to our shareholders and will continue to focus on building long-term shareholder value."
China Precision Steel
is a niche precision steel processing company principally engaged in the production and sale of high precision cold-rolled steel products and provides value added services such as heat treatment and cutting medium and high carbon hot-rolled steel strips. China Precision Steel's high precision, ultra-thin, high strength (7.5 mm to 0.05 mm) cold-rolled steel products are mainly used in the production of automotive components, food packaging materials, saw blades, steel roofing and textile needles. The company sells to manufacturers in the People's Republic of China as well as overseas markets such as Nigeria, Ethiopia, Thailand and Indonesia. China Precision Steel was incorporated in 2002 and is headquartered in Sheung Wan, Hong Kong.